*Our prices are competitive, cheaper imported petrol substandard – Dangote
*Deregulated commodity markets work best with an open system of multiple sellers and multiple buyers – Pinnacle Oil and Gas
*Without competition, market will be exploitative and strictly for profiteering – PETROAN
* We can import petrol at cheaper rates than Dangote rates – IPMAN
CHIGOZIE AMADI
The downstream petroleum industry space has been dominated in the past few days by the controversies over allegations and counter-allegations of importation of cheap substandard premium motor spirit (PMS) popularly called petrol.
Marketers had stated that the petrol they would import will be cheaper than Dangote rate. As a result of this Dangote Refinery issued a statement noting that any imported petrol that is cheaper than its rate is substandard, a statement that didn’t sit well with marketers.
To the marketers, Dangote wants to monopolise the market and be the sole seller of petrol in Nigeria, which will give the position to be the sole determinant of how much petrol sells in Nigeria.
Petroleum Products Retail outlets Owners Association of Nigeria (PETROAN) accused Dangote Refinery of trying to corner the petrol market by suppressing competitors in the subsector. The position of PETROAN and other marketers is that without competition, market will be exploitative and strictly for profiteering. To them, Dangote Refinery doesn’t have to see any product that doesn’t pass through it as substandard. Besides, Nigeria has a regulatory body that certifies products to be spec or off-spec and that the market is so large to accommodate all players.
Dangote Refinery had on Sunday in a statement by the company’s Group Chief Branding and Communications Officer, Anthony Chiejina, said: “We had lately refrained from engaging in media fights, but we are constrained to respond to the recent misinformation being circulated by IPMAN, PETROAN, and other associations.
“Both organisations claim that they can import PMS at lower prices than what is being sold by the Dangote Refinery. We benchmark our prices against international prices, and we believe our prices are competitive relative to the price of imports. If anyone claims they can land PMS at a price cheaper than what we are selling, then they are importing substandard products and conniving with international traders to dump low quality products into the country, without concern for the health of Nigerians or the longevity of their vehicles. Unfortunately, the regulator (NMDPRA) does not even have laboratory facilities which can be used to detect substandard products when imported into the country.
“Post deregulation, NNPC set the pace by selling PMS to domestic marketers at N971 per litre for sale into ships and at N990 for sale into trucks. This set the benchmark for our pricing, and we have even gone lower to sell at N960 per litre for sale into ships while maintaining N990 per litre for sale into trucks.
“In good faith, and in the interest of the country, we commenced sales at these prices without clarity on the exchange rate that we will use to pay for the crude purchased.
“At the same time, an international trading company has recently hired a depot facility next to the Dangote Refinery, with the objective of using it to blend substandard products that will be dumped into the market to compete with Dangote Refinery’s higher quality production.
“This is detrimental to the growth of domestic refining in Nigeria. We should point out that it is not unusual for countries to protect their domestic industries in order to provide jobs and grow the economy. For example, the US and Europe have had to impose high tariffs on EVs and microchips in order to protect their domestic industries.
“While we continue with our determination to provide affordable, good quality, domestically refined petroleum product in Nigeria, we call on the public to disregard the deliberate disinformation being circulated by agents of people who prefer for us to continue to export jobs and import poverty.”
Photo caption: PETROAN logo
Reacting, PETROAN in a statement signed by its spokesperson, Joseph Obele, on Monday, said the accusation of importing substandard products by Dangote is “his usual gimmick for maintaining monopoly.”
To them, consumers get the best value for pricing when competition is at its peak, hence competition should be encouraged. They added that any market devoid of competition will be exploitative and strictly for profiteering.
PETROAN further stated that it has concluded plans with her foreign refinery counterparts and financial partners to import the best quality of PMS and then sell far less than the present selling rate of PMS in Nigeria.
The statement read: “Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN) has successfully incorporated a Strategic Business unit called PETROL.
“PETROAN’s drive was solution-centric and patriotism following the pricing instability and turbulences in the downstream sector.
“The reformative and transformational agenda of President are seen as inimical to advocates and beneficiaries of monopolistic market. The President Interventions were meant to liberalise the downstream sector by building an all-inclusive market.
“Intensive or aggressive competition in any market brings the best value for money exchange for a commodity. Consumers get the best value for pricing when Competition is at its peak, hence competition should be encouraged.
“Contrary to competition, such a market will be exploitative and strictly for profiteering. The publication by Dangote refinery that PETROAN will import substandard petroleum product is not coming as a surprise to stakeholders, because such is his usual gimmick for maintaining monopoly.
“The publication was coming after PETROAN and IPMAN announced plans to sell far less than the current selling rate of PMS in Nigeria.
“It is important to set the records straight that PETROAN has never compared the price of Dangote PMS with any other on the fact that Dangote’s PMS price wasn’t known until this morning at the press release by Dangote Refinery.
“PETROAN has concluded plans with her foreign Refinery counterparts and financial partners to import the best quality of PMS and then sell far less than the present selling rate of PMS in Nigeria.
“We planned to enter the market before December 2024, pending the approval of our import permit licence by the regulatory agency and access to foreign exchange from CBN at the official rate.
“Before now Dangote Refinery has refused to make public her selling rate of PMS until IPMAN and PETROAN announced readiness to sell less.
“The rate of N990 as announced by Dangote Refinery was inconsiderate base on the fact Dangote Refinery enjoyed massive concession for accessing foreign exchange during the construction of the refinery.
“The core determinant for setting price is consideration for cost of production then add a fair margin. But this wasn’t the case for the determinant of PMS price by Dangote refinery as they said the parameter was comparison with the international selling rate at the global market.
“A nation that gave you a yet-to-be-disclosed concession for foreign exchange which was highly criticised by financial experts, such a country pricing template shouldn’t have been templated by the selling rate at the international market but rather it should have been cost of production plus fair margin.
“Goods from the China markets are not selling as high like goods from the American market because cost of production differs.
“The allegations that PETROAN will import inferior Products and saying also that an international company is trying to establish a PMS blending plant in Lagos are all strategies for Dangote Refinery to push others out of the market in view of achieving monopoly for exploitation.
“Few months ago the CEO of Dangote Refinery said NNPC LTD was importing inferior petroleum products and that his own was far better than what NNPC LTD was selling to marketers. In another press conference, he said the Refinery at Malta was just a blending plant and not a Refinery. All the allegations are with the objectives of closing the doors for other operators to enjoy monopoly.
“Evidences available showed that automotive gas oil (AGO), popularly called diesel, as a deregulated product was selling for less than N800 in Nigeria market few weeks before the commencement of AGO production by Dangote Refinery, at the entrance of AGO market by Dangote refinery we witnessed a rapid surge above N1,000 as against the perception of a “Salvaging Refinery”.
“PETROAN uses this medium to commend Mr. President for his commitment towards the revamping of the nation-owned refineries. It is on record that the ongoing rehabilitation project never suffers funding under President Tinubu as it was earlier.
“We will still maintain our position by counselling that the Port Harcourt and Warri Refinery plant after rehabilitation should immediately be privatised and handled over to a reputable firm that has the technical capability, managerial skills and financial strength in partnership with PETROAN and other critical stakeholders.
“This will enable the operators of the government-owned refineries to withstand aggressive ballistic Competition that will be poise by the known beneficiaries of monopolistic market. Antecedents of the beneficiaries of monopolistic market has showed numerous suffocating Business owners crashing out of other sectors for sole operator in the past.
“Stakeholders concerns is a prayer that the process of the privatisation should be transparent using the Indorama Petrochemicals as a model as against Maintenance Repairs And Operations (MRO) contract business scholars have described the red ocean strategy as a situation when companies try to outperform their rivals to grab a greater share of existing demand.
“While some other business scholars argued that it is detrimental to adopt the red ocean strategy with the motive of making your competitors quit in view of acquiring their facilities because such market will be a monopolistically orchestrated market in view of exploiting the people.
“A balance market should be an all-inclusive market players where the market leader is enjoying his lead, while the market challenger is servicing a certain degree of the consumers and the market followers are still surviving in the market at affordable price.
“Therefore, it is penitent that Federal Government should discourage and dismantle any attempt of monopoly in the downstream sector in view of crashing the current selling rate of PMS. The only catalyst to trigger PMS price reduction is by ushering in competition and PETROAN will support the Federal government in achieving intensive competition in the sector.
“Most importantly, the solution to the ongoing downstream sector pricing turbulence and instability is for Mr. President to midwife or delegate an all-inclusive stakeholders meeting including DAPPMAN, MEMAN, PETROAN, IPMAN NUPENG and PENGASSAN.
“This meeting tends to get first-hand valuable inputs from the industry players in view of having a final solution for PMS pricing in the downstream sector.”
Also, reacting to Dangote statement that an international trading company has recently hired a depot facility next to the Dangote Refinery, with the objective of using it to blend substandard products that will be dumped into the market to compete with Dangote Refinery’s higher quality production, the Chief Executive Officer, Pinnacle Oil and Gas Limited, Bob Dickerman, in a statement, said: “Deregulated commodity markets work best with an open system of multiple sellers and multiple buyers bidding to establish the market price. For Nigeria to have supply options that include local refineries or imports is the mechanism that will establish the lowest sustainable prices. A free market is also regulated to ensure that all products meet the country’s specifications and that all players behave responsibly.
“On November 3, 2024, the Dangote Organization issued a Press Release. In the Release, Dangote alleged that “…an international trading company has recently hired a depot facility next to the Dangote Refinery, to use it to blend substandard products that will be dumped into the market to compete with Dangote Refinery’s higher quality products.”
“Pinnacle Oil & Gas has the only depot facility next to the Dangote Refinery. Without equivocation, we state that Pinnacle Oil & Gas would never engage or attempt to import or distribute any off-spec or substandard product into the Nigerian market. Our company has a reputation for integrity and regulatory compliance which is extremely important to us.”
However, industry analysts are of the view that all players should work together for the good of Nigerian consumers.
