…Says job loss, business shutdown imminent
The Petroleum Products Retail Outlets Owners Association of Nigeria, PETROAN has raised concerns over Dangote Refinery’s forward integration adoption, warning that it could lead to a monopoly in disguise and pose a significant job loss threat to Nigeria.
PETROAN, in a statement by its National Public Relations Officer, PRO, Dr. Joseph Obele in Abuja on Monday, argued that with a production capacity of 650,000 barrels per day, Dangote Refinery should be competing with global refineries, not operating as a distributor in the downstream sector.
The massive refinery, one of the largest in sub-Saharan Africa, Obele observed, was
expected to satisfy domestic fuel demand and export surplus products.
He recalled that PETROAN had previously raised alarms about Dangote’s intentions to dominate the downstream sector, citing concerns that the company may leverage its market power to fix prices, limit competition, and exploit consumers, much like it had done in other sectors.
According to him, “PETROAN warns that Dangote’s tactics may include a pricing penetration strategy, where they reduce prices to capture market share, with the ultimate goal of forcing other filling station operators to quit the market. This could lead to a massive shutdown of filling
stations across Nigeria, resulting in widespread job losses.
“The introduction of 4,000 brand-new Compressed Natural Gas, CNG-powered tankers by Dangote Refinery poses a significant threat to the livelihoods of thousands of truck drivers and owners. While CNG trucks may offer a lower cost of transporting petroleum products, this shift could lead to widespread job losses in the industry.”
The PETROAN spokeswoman maintained that the adoption of a forward integration strategy by Dangote Refinery would greatly affect various stakeholders including modular refineries, truck owners, filling station operators, local suppliers of petroleum products as well as the telecom diesel suppliers.
“It is obvious that Dangote plans to gain full monopoly of the downstream sector, which would enable the company to exploit Nigeria’s petroleum consumers. This could lead to higher prices, reduced competition, and decreased economic efficiency”, he added.
He however, quoted the National President of PETROAN, Dr. Billy Gillis Harry as calling on the Executive Director of the Nigerian Midstream and Downstream Petroleum Regulatory Authority, NMDPRA
and the Minister of State for Petroleum to put in place price control mechanisms to
prevent any form of monopoly.
He further quoted Dr. Harry as emphasizing that competition should always be encouraged to protect consumers and promote economic efficiency.
Warning that Dangote Refinery’s dominance could stifle competition, he insisted that its operations could negatively impact employment opportunities, saying,”PETROAN warns that Dangote Refinery’s adoption of forward integration could lead to anti competitive behaviours.”
He therefore called on the federal government to encourage a competitive refining market environment, strengthen regulatory agencies to monitor market behavior, ensure crude oil supply to local refineries and explore alternative livelihoods for affected workers.
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