The Depot and Petroleum Products Marketer’s Association of Nigeria has called on the Federal Government to remove restrictions on marketers sourcing products exclusively from Dangote Refinery.
DAPPMAN is the group of oil marketers accused by the Vice President of Dangote Industries Limited, Devakumar Edwin, to have reported the Dangote Refinery to President Bola Tinubu for its low-priced product, according to The Punch.
In response, the Secretary of DAPPMA denied the allegations, stating they did not report the refinery to the President as described by Edwin.
Edwin claimed that the association alleged the refinery’s reduced diesel prices were detrimental to their businesses.
Last week, during a session organized by Nairametrics on X, Edwin revealed that oil marketers had been boycotting Dangote’s diesel and aviation fuel following the refinery’s significant price reductions.
According to him, over 95 per cent of petroleum product importers in Nigeria are not buying products from the Dangote refinery.
He said the refinery struggles to sell about 29 tankers of diesel per day due to low patronage from local petroleum product importers.
As a result of poor local patronage, the refinery, he said, exports most of its diesel and aviation fuel.
“Petroleum product marketers in Nigeria have written to President Bola Tinubu, complaining that the refinery’s local diesel prices, which have dropped from N1,200 to N1,000 and now to N900 per litre, are negatively impacting their businesses,” Edwin stated.
Despite several petroleum marketers’ associations issuing denials, a copy of the letter identifies the group accused by Dangote Industries Limited Vice President Devakumar Edwin as the Depot and Petroleum Products Marketer’s Association of Nigeria.
The letter, addressed to Senate President Godswill Akpabio on July 4, 2024, highlights urgent issues within the Downstream Petroleum Industry and advocates for the maintenance of deregulation and free market policies as outlined in the Petroleum Industry Act (PIA) 2021.
The letter signed by its Executive Secretary, Olufemi Adewole, was 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”.
“We write to bring to the attention of the President of The Senate, some highlights of issues in the Downstream Petroleum Industry which require urgent intervention to engender the sustenance of deregulation and free market policies as intended by the PIA 2021.
“We recognise the need for the Nigerian Midstream and Downstream Petroleum Regulatory Authority to remain committed to the legislation establishing it with consistent policies. Deregulation and a free market are critical for the survival of this Industry and stipulations must remain fair with consistent policies which are required to achieve the real intendment of deregulation and liberalisation of the petroleum downstream sector.
“We also recognise and note the recent and boisterous support for Dangote refinery by the leadership of the National Assembly during your recent visit to the refinery and we hereby state emphatically that the success of the refinery would indeed be a thing of pride and joy to all of us as Nigerians,” the letter read in part.
DAPPMAN argued that prior to the establishment of Dangote Refinery, Nigerian entrepreneurs had invested over N3 trillion in the downstream petroleum sector.
The association warned that the emergence of a monopoly in the supply of Automotive Gas Oil (AGO) by the Dangote Refinery could be detrimental to both downstream operators and the nation.
DAPPMAN expressed concerns that this monopoly would deprive Nigerians of more affordable options, as Dangote Refinery would have the sole authority to set prices without competition.
It likened this potential scenario to Dangote’s dominance in other sectors such as cement, sugar, salt, and noodles.
Additionally, DAPPMAN alleged that the refinery’s diesel product exceeds the average sulphur content of 50 ppm required for AGO imports. The association criticized the regulator for restricting other downstream operators to sourcing this product exclusively from Dangote Refinery.
It also alleged that the company’s diesel product far exceeds the average of 50/ppm sulphur required for AGO imports by marketers, “yet the regulator has restricted all other downstream operators to sourcing this product exclusively from the Dangote Refinery.”
The letter continued, “We are all aware of the antecedents of the Dangote Industries in the cement industry, the sugar industry, the salt production sector and the attempts made in the noodles sector all of which either left competing brands comatose or seriously bruised.
“With hindsight of the foregoing, however, we note with dismay, the apparent tilt towards the creation of a monopoly for the supply of Automotive Gas Oil to Nigeria’s downstream operators solely by the Dangote Refinery.
“It is on credible record that marketers’ AGO imports have complied with the Afri 5’ Gasoil and Gasoline specification of sulphur content not exceeding 50/parts per million (ppm) from 1st January 2024 despite the inability of local refining capacity, (including the Dangote Refinery), to meet this specification to date.
“Dangote refinery’s AGO presently has sulphur content exceeding 700/ppm, in accordance with waiver granted by the NMDPRA. This far exceeds the average of 50/ppm sulphur required for AGO imports by marketers.
“This is a clear adoption of Dangote Oil Refinery as the SOLE supplier of AGO to the nation. This situation is detrimental not only to the downstream operators but the nation at large. It deprives Nigerians of cheaper options, as the Dangote Refinery will always have the final say and dictate prices without any competing alternatives.
“In the spirit of deregulation, it is important that market forces are allowed free reign in the sector within the appropriate rule of Law. Dangote Refinery’s initial step was to crash the price of AGO from a ‘high’ of N1,700/litre to N1,200/litre and later to N1000/litre and later N900/litre despite the large inventory of the imported AGO with marketers which thus could not be sold as it was imported with very high forex rate.”
They noted that marketers with substantial AGO inventories aimed to mitigate losses when forex rates dropped and the naira appreciated against the US dollar.
These marketers sought to import cheaper AGO to adjust their retail pump prices, reduce losses, and liquidate their existing stock.
“Unfortunately, the regulator came up with the restrictive policy which foreclosed
importation of AGO thereby limiting the product source to only Dangote refinery,” DAPPMAN said in its letter.
The letter also alleged that the refinery consistently sells refined petroleum products to foreign traders at $50 per metric ton less than the price charged to local companies and charges in dollars without an option to pay in naira for local marketers.
“We emphasize that all the scenarios listed above are neither in tandem with the spirit of PIA 2021 nor with the Federal Competition and Consumer Protection Act, 2018, which collectively restrict monopoly of any sort and indeed, run contrary to President Bola Tinubu administration’s admirable policies to foster ease-of-doing-business in Nigeria,” it said.
In its recommendations, DAPPMAN urged the government to promptly address the situation by removing restrictions and forced limitations on marketers sourcing products exclusively from Dangote Refinery. The association called for these measures to remain in place until the Port Harcourt and Warri Refineries are fully rehabilitated.
“There should be no restriction or forced limitation of any marketer to be sourcing his product from Dangote Refinery until the Port Harcourt and Warri Refineries are fully rehabilitated and re-streamed to increase local refining capacity and provide product options for the nation.
“There should be no monopoly of sourcing and all marketers should be allowed to import fuels into the country in line with internationally recognised healthy specifications,” The letter concluded.
The DAPPMAN Executive Secretary, Olufemi Adewole, said the comments by the Dangote official didn’t paint the accurate picture.
“Please compare this actual paragraph of the letter which I signed to what Edwin quoted and twisted and you’ll see the difference,” He noted.
