The Depot and Petroleum Products Marketer’s Association of Nigeria is the organisation of oil marketers that Vice President of Dangote Industries Limited, Devakumar Edwin, claims were responsible for reporting the Dangote Refinery to President Bola Tinubu for its low-priced goods.
However, the secretary of the group denied informing Tinubu about the refinery in the way Edwin had stated.
At a space session hosted by Nairametrics on X last week, a Dangote official asserted that the oil marketers had informed the refinery that the plant’s inexpensive diesel was hurting the oil marketers’ bottom lines.
Additionally, he disclosed that oil marketers persisted in their boycott of Dangote aviation fuel and diesel following the refinery’s collapse in diesel prices.
He claims that more than 95% of Nigerian importers of petroleum products do not purchase goods from the Dangote refinery.
He said that the refinery exports the majority of its diesel and aviation fuel due to low local demand.
“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.
A copy of the letter received by journalists on Sunday identified the group that the Dangote executive had named as the DAPPMAN, despite the fact that several petroleum marketers’ groups had released comments refuting this allegation.
The association wrote a letter on July 4, 2024, to Senate President Godswill Akpabio highlighting problems in the downstream petroleum industry that need immediate attention in order to support deregulation and free market principles as intended by the PIA 2021.
“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” was the heading of the letter, which was signed by Olufemi Adewole, the organization’s executive secretary.
“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.
It said that Nigerian businesspeople had invested over N3 trillion in the country’s downstream petroleum sector prior to the construction of the Dangote refinery, and that the country as a whole as well as the downstream operators stand to lose from the Dangote Refinery’s push to create a monopoly on the supply of automotive petrol oil to Nigeria’s downstream operators.
The association clarified that the monopoly prevents Nigerians from having access to less expensive options since the Dangote Refinery, which already controls the cement, sugar, salt, and noodle industries, will always be able to set prices and have the last word.
Additionally, it claimed that “yet the regulator has restricted all other downstream operators to sourcing this product exclusively from the Dangote Refinery,” despite the fact that the company’s diesel product substantially above the average of 50/ppm sulphur required for AGO imports by marketers.
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 claimed that as currency rates plummeted and the naira strengthened versus the US dollar, marketers holding this massive amount of AGO saw a chance to cut losses. They set out to import cheaper AGO stock in order to “blend” their retail pump price, cut losses, and sell off their AGO 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.
According to the letter, the refinery also regularly offers refined petroleum products to foreign traders for $50 per metric tonne less than what local businesses are charged, and it charges in dollars without giving local marketers the choice to pay in naira.
“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.
After presenting its suggestions, DAPPMAN requested that the government step in quickly to resolve the aforementioned issue by removing any forced constraints or restrictions on marketers’ ability to acquire goods from Dangote Refinery until the Port Harcourt and Warri Refineries are completely restored.
“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.
In a conversation with news correspondents, Olufemi Adewole, the Executive Secretary of DAPPMAN, spoke, stating that the Dangote official’s remarks did not accurately depict the situation.
“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.
When asked if the marketers would still patronise the company, the secretary replied, “Like yesterday, yes!!!”
“NNPCL as sold buyer is Indirectly saying they are maintaining subsidy as it means marketers will take from the NNPC stock lifted off Dangote Refinery.”
