The Dangote refinery’s recent announcement of petrol price reductions has sparked controversy within Nigeria’s petroleum market. While presented as a patriotic gesture, the move has drawn criticism from the Depot and Petroleum Product Marketers Association of Nigeria (DAPPMAN), which argues that the price cuts are strategically timed to undermine competition and impose financial strain on other market participants. DAPPMAN’s concerns highlight the complex dynamics of a newly deregulated downstream sector grappling with the arrival of a major new player.
DAPPMAN contends that the timing of Dangote’s price reductions coincides with periods when other importers have substantial fuel shipments either en route or already stored, creating a sudden price shock. This tactic, they argue, disrupts the market equilibrium and places undue pressure on competitors who are forced to adjust to the artificially lowered prices. Furthermore, DAPPMAN alleges that Dangote offers more favorable prices to international buyers while charging higher rates to local offtakers, a practice that contradicts the refinery’s public pronouncements of prioritizing the Nigerian market. This discrepancy, according to DAPPMAN, unfairly burdens domestic businesses already operating with thin profit margins.
The dispute also extends to the refinery’s relationship with the Nigerian Union of Petroleum and Natural Gas Workers (NUPENG). While not directly involving DAPPMAN, the escalating tensions between Dangote and the union raise concerns about potential disruptions to the downstream sector’s stability, particularly in the context of the ongoing post-deregulation adjustments. DAPPMAN emphasizes the need for a smooth transition and cautions against actions that could jeopardize the fuel supply chain and negatively impact Nigerian consumers.
Central to DAPPMAN’s argument is the assertion that the refinery’s contribution to national fuel supply, while significant, is not as dominant as portrayed. They point out that Dangote’s production meets only 30-35% of national demand, leaving the remaining share to be filled by other established importers and distributors, including DAPPMAN members. These marketers, according to DAPPMAN, have played a crucial role in ensuring consistent fuel availability across Nigeria for decades, navigating various challenges including foreign exchange fluctuations, subsidy regime changes, security concerns, and economic downturns. They argue that their long-standing contribution to the sector should be acknowledged and not overshadowed by the arrival of the Dangote refinery.
DAPPMAN also refutes claims that its members deal in substandard petroleum products, emphasizing that all imported fuel undergoes rigorous testing by independent, regulator-approved laboratories, adhering to both national and international quality standards. They underscore their commitment to complying with the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) regulations, ensuring that the fuel they supply meets the required specifications.
In essence, DAPPMAN’s response to Dangote’s price cuts reveals a deeper concern about fair competition and market stability in the deregulated downstream sector. They argue that while the Dangote refinery’s entry is welcomed as a major infrastructure development, its practices should not undermine the existing ecosystem of importers and distributors who have long served the Nigerian market. DAPPMAN calls for a level playing field where all participants can operate under transparent and equitable conditions, ultimately benefiting the Nigerian consumer through consistent fuel availability and competitive pricing. The ongoing debate highlights the challenges of transitioning to a deregulated market and the need for careful consideration of the impact of new entrants on existing players and the wider economy.
