Dangote Refinery Faces Accusations of Creating Monopoly as Oil Marketers Deny Allegations....KINDLY READ THE FULL STORY HERE▶

A recent controversy has erupted between Dangote Industries and the Depot and Petroleum Products Marketer’s Association of Nigeria (DAPPMAN), after claims by Dangote’s Vice President, Devakumar Edwin, accused the group of reporting the refinery’s low-priced diesel to President Bola Tinubu. According to Edwin, the oil marketers were displeased with the refinery’s price cuts, as they allegedly hurt their businesses.

Allegations Against DAPPMAN

During a recent Nairametrics space session on X, Edwin revealed that oil marketers had reported Dangote Refinery to President Tinubu, arguing that the refinery’s low diesel prices negatively impacted their businesses. He noted that local marketers had stopped purchasing diesel and aviation fuel from Dangote, leading to a significant drop in sales, with the refinery selling just 29 tankers of diesel per day.

The low local patronage, Edwin explained, forced the refinery to export most of its diesel and aviation fuel. Diesel prices at Dangote Refinery had dropped significantly from N1,200 to N900 per litre, a move the marketers reportedly described as counterproductive to their business models.

DAPPMAN Responds to Accusations

Despite these claims, DAPPMAN has strongly denied the accusations. The association’s Executive Secretary, Olufemi Adewole, stated that the marketers never approached President Tinubu with such a complaint. Adewole’s letter to Senate President Godswill Akpabio, dated July 4, 2024, provided insight into the real concerns raised by DAPPMAN, which included maintaining fair competition within Nigeria’s downstream petroleum industry.

The letter titled, “An Urgent Call for the Sustenance of Deregulation and Free Market in the Downstream Petroleum Industry in Strict Compliance with the Petroleum Industry Act 2021,” outlined the association’s belief that monopolies in the industry, particularly in diesel supply, could harm not just the marketers but the broader economy.

Concerns Over Dangote’s Market Influence

DAPPMAN’s letter also highlighted a potential monopoly by Dangote Refinery, warning that allowing the refinery to be the sole supplier of Automotive Gas Oil (AGO) would restrict healthy competition. They stressed that other Nigerian entrepreneurs had invested over N3 trillion in the downstream sector and should not be forced out of business by Dangote’s dominance.

A significant point raised in the letter was the quality of the refinery’s diesel. The association claimed that Dangote’s AGO has a sulphur content exceeding 700 parts per million (ppm), far above the required 50/ppm. This discrepancy, according to DAPPMAN, is detrimental to both marketers and consumers, as the product doesn’t meet international standards. Yet, regulators have restricted marketers to sourcing only from Dangote Refinery, further limiting competition.

Monopoly Concerns and the Need for Policy Review

DAPPMAN expressed concerns over Dangote’s influence across multiple sectors, citing its dominance in industries such as cement, sugar, and salt production. The association argued that if unchecked, the refinery could monopolize the downstream petroleum market, making it difficult for smaller marketers to compete. They also accused Dangote Refinery of offering lower prices to foreign buyers, further disadvantaging local companies.

In response to these challenges, DAPPMAN called on the government to eliminate restrictions that force marketers to source products exclusively from Dangote. They recommended allowing free importation of petroleum products in line with international standards and promoting healthy competition until Nigeria’s other refineries, such as those in Port Harcourt and Warri, are fully rehabilitated.