The Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN) has raised serious concerns over Dangote Refinery's announcement to begin direct distribution of premium motor spirit (petrol) and automotive gas oil (diesel) nationwide, warning that the move could lead to massive job losses and business shutdowns across Nigeria.
PETROAN's spokesperson, Joseph Obele, issued a statement on Monday highlighting these concerns following Dangote Refinery's Sunday announcement about its plans to commence direct distribution of petroleum products.
Monopoly Concerns and Industry Impact
According to PETROAN, Dangote's forward integration strategy could create "a monopoly in disguise" that threatens thousands of jobs in Nigeria's downstream petroleum sector. The association argues that with its 650,000 barrels per day production capacity, Dangote Refinery should focus on competing with global refineries rather than operating as a distributor in the downstream sector.
"It is obvious that Dangote plans to gain a full monopoly of the downstream sector, which would enable the company to exploit Nigeria's petroleum consumers," PETROAN stated in its release.
The association warned that Dangote might employ a pricing penetration strategy—temporarily reducing prices to capture market share before potentially raising them once competitors are forced out of business. This could lead to widespread closure of filling stations across the country.
Threat to Transportation Sector
A particular concern highlighted by PETROAN is Dangote Refinery's introduction of 4,000 brand-new Compressed Natural Gas (CNG)-powered tankers. While these vehicles may offer lower transportation costs for petroleum products, their deployment could render thousands of existing truck drivers and owners jobless.
The association identified several stakeholders who could be negatively impacted by Dangote's strategy, including modular refineries, truck owners, filling station operators, local suppliers of petroleum products, and telecom diesel suppliers.
Call for Regulatory Intervention
Dr. Billy Gillis Harry, National President of PETROAN, has called on the Executive Director of the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) and the Minister of State for Petroleum to implement price control mechanisms to prevent monopolistic practices.
"Competition should always be encouraged to protect consumers and promote economic efficiency," Dr. Harry emphasized, urging regulatory authorities to take proactive measures.
The situation highlights the complex balance between welcoming major investments in Nigeria's petroleum refining capacity and protecting the existing ecosystem of businesses and jobs in the downstream sector.
As this development unfolds, industry stakeholders await the response from regulatory authorities and Dangote Refinery regarding these concerns.
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