Oil Marketers Reject Dangote’s Fuel Distribution Plan

Oil marketers under the aegis of the Petroleum Products Retail Outlets Owners Association of Nigeria have raised concerns over the Dangote Petroleum Refinery’s plan to distribute fuel directly to filling stations and other businesses nationwide.

PETROAN warned that the policy could lead to job losses and place Dangote in a monopoly-like position. With a production capacity of 650,000 barrels per day, PETROAN argued that the Dangote refinery should be competing with global refineries, not operating as a distributor in the downstream sector.
“This massive refinery, one of the largest in sub-Saharan Africa, is expected to satisfy domestic fuel demand and export surplus products,” the oil dealers said in a statement signed by PETROAN’s Publicity Secretary, Joseph Obele, on Monday.

PETROAN said it had previously raised the alarm 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 has done in other sectors.”
The association warned that Dangote’s tactics might include a pricing penetration strategy, where it would 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-powered tankers by the 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 statement added.

The association stated that adopting what it called a forward integration strategy by the Dangote refinery would greatly affect various stakeholders, including modular refineries, whose operations and market share, it noted, might be threatened by “Dangote’s dominance.”
As for truck owners, it stressed that job losses and reduced business opportunities could occur due to Dangote’s direct supply and the use of CNG-powered tankers.

PETROAN maintained that many filling stations could be forced to shut down while local suppliers of petroleum products might be negatively impacted by the refinery’s direct supply to end-users. The retailers projected that Dangote’s dominance could also threaten telecom companies’ diesel suppliers’ operations and market share.
“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.

“The National President of PETROAN, Dr Billy Gillis-Harry, calls on the Chief Executive of the Nigerian Midstream and Downstream Petroleum Regulatory Authority and the Minister of State for Petroleum Resources to put in place price control mechanisms to prevent any form of monopoly,” the statement read further.
Gillis-Harry emphasised that competition should always be encouraged to protect consumers and promote economic efficiency. He stressed that Dangote refinery’s dominance could stifle competition and its operations could negatively impact employment opportunities while promoting “anticompetitive” behaviours.

The PETROAN boss called for a competitive refining market environment, strong regulatory agencies to monitor market behaviour, adequate crude oil supply to local refineries, and alternative livelihoods for affected workers.
This came as findings showed that about 2,100 petrol retail outlet owners, 70 tank farm operators, and 95 jetty managers across the country might be pushed out of business as Dangote Petroleum Refinery moves to take full control of fuel distribution in Nigeria.
Owing to years of dependence on imported petrol, marketers had invested heavily in infrastructure such as tank farms, jetties, and logistics systems to facilitate fuel importation. However, with the new Dangote-led supply process, many of these costly investments risk being rendered obsolete, as the entire distribution chain would now be bypassed.

The marketers had recently raised the alarm that thousands of independent operators are scaling down their activities, citing mounting financial losses triggered by the volatile and unpredictable pricing of Premium Motor Spirit by the Refinery and fuel importers.
The situation forced over 4,900 petrol retail outlet owners from 7,000 outlets before the deregulation of the sector in 2023. Similarly, 70 tank farm owners have been compelled to cease operations in the past two years, leaving their facilities abandoned and idle as retailers and station owners increasingly avoid utilising their services.

The number of retailers dropped from 120 to 50 in two years. Also, a total of 95 jetty operators across the country are now facing an uncertain future.
However, contrary to PETROAN’s fears, the Dangote refinery said the scheme would lower fuel prices at the point of sale while improving fuel accessibility for both urban and rural communities.
The firm emphasised that the new initiative would support local economies and businesses, increase government revenue and strengthen long-term energy security and national efficiency. It was learnt that owners of filling stations can now make direct purchases and get free delivery without the involvement of third parties.