NOGASA and PETROAN have raised concerns over Dangote Petroleum Refinery’s intention to bypass the traditional distribution framework and supply refined products directly to end users. They warn that this could result in nationwide disruption, long-term shortages, and a breakdown of the current supply chain.

The oil suppliers urged Dangote Refinery to reconsider and engage in further discussions before launching direct distribution. They highlighted the failure of refineries under NNPCL as a precedent and appealed to President Bola Tinubu to step in, emphasizing that Dangote alone cannot manage national distribution sustainably. Bennett Korie, NOGASA’s national president, made this appeal during the group’s Annual General Meeting in Abuja.

In response, a Dangote Group official dismissed the objections, describing them as “anti-Nigeria” and insisting that the plan is intended to eliminate petrol logistics costs nationwide.

Billy Gillis-Harry, President of the Petroleum Products Retail Outlet Owners Association of Nigeria, supported NOGASA’s position. He urged Nigerians to be cautious in celebrating Dangote’s announcement.

On Thursday, depot petrol prices jumped from N815 to N870 per litre — a 7% increase — as the rift unfolded.

The $20bn Dangote refinery recently announced plans to deploy 4,000 CNG-powered tankers to deliver petrol and diesel directly to bulk consumers, skipping traditional intermediaries. These trucks are expected to begin operations by August 15. This initiative, backed by a N720bn investment, could save Nigeria N1.7tn annually and support 42 million MSMEs through reduced energy expenses and improved business margins.

Dangote says the programme aligns with its goal to cut logistics costs, improve energy efficiency, and support national economic growth.

Korie warned that if retail outlets are pushed out, reestablishing supply lines during any refinery disruption would be difficult. He noted that bundling refining, distribution, and retail under one entity is risky, citing how NNPCL’s move into direct retailing led to the collapse of its refineries.

He emphasized that NOGASA supports the refinery’s production efforts but sees direct distribution as a serious risk. Korie explained that “You are blending, you are refining, and at the same time operating, and again, add a filling station in your operation. You will have a problem.” He urged Dangote to focus solely on refining and selling to marketers who would then distribute.

Korie reaffirmed NOGASA’s willingness to collaborate with Dangote Refinery for mutual success but warned against monopolistic tendencies. “The entire giant’s indirect distribution of their products with the purchase of 4,000 distribution trucks for nationwide supply makes us worried about staying in the business,” he said, noting that many small suppliers depend on the existing system.

He also pointed out that over 50,000 filling stations and the jobs they provide could be at risk. Korie called for the government to initiate dialogue between Dangote Group and key players in the sector.

Billy Gillis-Harry echoed similar concerns, warning that Dangote’s full control of refining, logistics, and pricing could mirror past outcomes seen in the cement industry. “Because I want to draw your attention to the fact that we also have similar situations in our cement industry,” he noted, pointing to price hikes and loss of competition.

Gillis-Harry reported that retail outlet owners are losing up to N80 per litre, making it difficult to stay in business. He urged authorities to step in with pricing controls, ensure crude access for local refiners, and protect industry jobs.

Dangote reacts

A Dangote Group official expressed disbelief that fuel supply might be disrupted simply because someone aims to “distribute fuel for free.” The official argued that eliminating logistics costs would benefit Nigerians and wondered why this was being opposed.

He questioned the claim that NOGASA members would be displaced, stating that “The market is big enough.”

He pointed out that 4,000 trucks can’t possibly serve 774 LGAs alone and dismissed concerns of monopoly or job loss, adding that “Dangote is not saying, ‘don’t do your business.’”

IPMAN National Vice Chairman, Hammed Fashola, said he was unsure if NOGASA has the strength to disrupt distribution, but acknowledged that players are concerned about their survival.

“Everybody wants to make sure they remain in business,” Fashola said, noting that many in the supply chain might feel threatened. He expressed optimism that dialogue could align all interests.

Depots hike prices

Depot petrol prices surged by 7% from N815 to N870 per litre, following Dangote refinery’s sudden halt in petrol sales at its terminals. This has increased market volatility and added to price pressures.

A memo titled “Important Update on DPRP Collection Account for PMS” instructed marketers to stop payments for loading at the refinery’s gantry until further notice.

Meanwhile, importers have lowered their prices, triggering fresh competition. But depots soon responded by raising prices, citing global crude increases. Data from petroleumprice.ng showed that major depots including NIPCO, Aiteo, Rain Oil, MenJ, Sahara, and Aipec now sell at N870 per litre, while Dangote’s depot offers slightly lower at N865.

Credit: The Punch

Importers have slashed petrol prices lower than what the Dangote Petroleum Refinery offers, triggering a new wave of competition. This development follows a recent appeal by the President of the Dangote Group, Alhaji Aliko Dangote, urging the Federal Government to ban fuel importation.

According to The Punch, some fuel stations are now selling petrol below N860 per litre, whereas Dangote’s partners like MRS and Heyden are retailing between N865 and N875 in Lagos and Ogun States.

One filling station, SGR in Ogun, dropped its price to N847 per litre on Tuesday. Marketers confirmed to The PUNCH that most importers have adjusted their ex-depot petrol prices to undercut Dangote’s rates.

As of Tuesday, Dangote refinery’s petrol was selling at N820 per litre, while some depots priced theirs at N815. Data from Petroleumprice.ng showed that Aiteo, Menj, and others had petrol priced at N815/litre.

It was gathered that importers are strategically pricing their products to stay afloat. Many had earlier complained about incurring losses when the 650,000-barrels-per-day Dangote refinery began regular price reductions earlier this year.

Chinedu Ukadike, National Publicity Secretary of the Independent Petroleum Marketers Association of Nigeria, confirmed the ongoing price reductions by importers.

“Depot owners are dropping their petrol prices. Some of them are selling N815, some are selling N817, while Dangote is selling N820. NNPC is still selling at N825; it has not dropped its prices yet,” Ukadike said.

He praised this trend as a positive sign of a liberalised market and advised President Bola Tinubu not to consider banning fuel imports.

“This is the beauty of the liberalisation of the market. That is why we opined that the President should not ban anybody from importing petroleum products. Nobody should be stopped from bringing in petroleum products. That is the beauty of opening up the market. Implementation and local refining will checkmate unfair pricing. As an indigenous country, you must refine to ensure that you have the best price,” Ukadike added.

Addressing concerns over substandard fuel being brought into the country, Ukadike noted that the Nigerian Midstream and Downstream Petroleum Regulatory Authority exists to monitor such issues.

Currently, it appears importers are challenging Dangote by aggressively cutting prices, a move Dangote recently called “unfair competition.” According to him, fuel imports into Nigeria are undermining domestic refining and deterring further investments in the energy sector and wider economy.

To sustain local operations, he urged African governments to take protective measures like the United States, Canada, and the European Union have done.

Dangote stated that the “Nigeria First” policy announced by President Bola Tinubu should be extended to the petroleum product industry. “The Nigeria First policy announced by His Excellency, President Bola Tinubu, should apply to the petroleum product sector and all other sectors,” he said.

Dangote is calling for a ban on the importation of locally available products such as petrol and diesel. He argued that local refiners are struggling to compete due to what he termed “dumping,” and claimed importers are bringing in substandard fuels that wouldn’t be allowed in Europe.

“And to make matters worse, we are now facing increased dumping of cheap, often toxic petroleum products, some of which are blended to substandard levels that would never be allowed in Europe or North America,” he said.

He also said some importers are supplying subsidised petroleum products or crude oil from Russia, which negatively impacts domestic pricing and forces local refiners to sell below production cost.

“Due to the price caps on the Russian petroleum products, discounted petroleum products produced in Russia or with discounted Russian crude find their way to Africa, severely undercutting our local production, which is based on full crude pricing. This has created an unlevel playing field in most African countries. Petrol and diesel are sold for about a dollar net of taxes.

“In Nigeria, due to this unfair competition, this price is just about 60 cents, even cheaper than Saudi Arabia, which produces and refines its own oil. This is due to the fact that we are having too much dumping. To remain viable, we urge the governments across Africa to take deliberate steps as the United States, Canada, and the European Union have done to protect domestic producers from unfair competition,” he said during an event hosted by the Nigerian Upstream Petroleum Regulatory Authority in Abuja.

However, marketers opposed Dangote’s request, urging the Federal Government not to place petroleum products on the import ban list under the “Nigeria First” policy.

The President of the Dangote Group, Alhaji Aliko Dangote, urged President Bola Tinubu to include refined petroleum products on the list of items restricted under the ‘Nigeria First’ policy of the Federal Government. However, oil marketers and industry analysts opposed the proposal on Sunday.

The ‘Nigeria First’ policy restricts government agencies from importing goods that can be produced locally. In May, Tinubu instructed that agencies should not procure foreign goods or services already available in Nigeria unless they obtain a waiver from the Bureau of Public Procurement.

Speaking at the Global Commodity Insights Conference on West African Refined Fuel Markets—organized by the Nigerian Midstream and Downstream Petroleum Regulatory Authority in collaboration with S&P Global Insights—Dangote called for petrol, diesel, and other refined petroleum products to be added to the policy’s restricted items.

He argued that fuel importation undermines local refining and discourages further investment in the sector and economy. He called on African governments to adopt protective measures similar to those of the United States, Canada, and the European Union to defend domestic producers from “unfair competition”.

Dangote emphasized that the “Nigeria First policy announced by His Excellency, President Bola Tinubu, should apply to the petroleum product sector and all other sectors.”

His proposal aimed to restrict imports of petrol, diesel, and other locally refined products. He stated that local refiners struggle to sell their products due to what he termed as dumping. He accused importers of flooding the market with toxic fuel unfit for sale in Europe.

“And to make matters worse, we are now facing increased dumping of cheap, often toxic petroleum products, some of which are blended to substandard levels that would never be allowed in Europe or North America,” he said.

He also noted that some of these imports include fuel or crude oil subsidised in Russia, which distorts local pricing and forces refiners to sell below cost.

“Due to the price caps on the Russian petroleum products, discounted petroleum products produced in Russia or with discounted Russian crude find their way to Africa, severely undercutting our local production, which is based on full crude pricing. This has created an unlevel playing field in most African countries. Petrol and diesel are sold for about a dollar net of taxes.

“In Nigeria, due to this unfair competition, this price is just about 60 cents, even cheaper than Saudi Arabia, which produces and refines its own oil. This is due to the fact that we are having too much dumping. To remain viable, we urge the governments across Africa to take deliberate steps as the United States, Canada, and the European Union have done to protect domestic producers from unfair competition,” he stated.

Dangote clarified that this move was not about monopolising the sector but encouraging local investment. He criticised wealthy Nigerians for investing abroad while criticising those building within the country.

“Let me take this opportunity to address concerns around monopoly and dominance. The reality is that too many people who have the means and the opportunity to contribute meaningfully to our nation’s growth choose instead to criticise from the sidelines while investing their wealth abroad,” Dangote said.

He revealed that his $20bn refinery has exported approximately 1.35 billion litres of petrol within 50 days, positioning Nigeria as a net exporter of petroleum products.

“Today, Nigeria has actually become a net exporter of refined products. Before I came on the podium, I asked my people how many tonnes of PMS we have actually exported. From June beginning to date, we have exported about 1 million tonnes of PMS, within the last 50 days,” he said.

Marketers tackle Dangote

Oil marketers rejected Dangote’s request, urging the government to continue allowing fuel importation.

The National Publicity Secretary of the Independent Petroleum Marketers Association of Nigeria, Chinedu Ukadike, told our correspondent that banning imports would damage the sector.

“We independent marketers will depart from that request. If the government does that, that means we will not be able to check inflation and monopoly, since it is the only refinery operating in the country now. We should continue to import even as we buy locally.

“I heard that the NMDPRA stated clearly that Dangote cannot produce all the fuel that the country needs. We will appreciate it if the country allows importation to continue since we are not paying subsidy,” Ukadike said.

Responding to Dangote’s claim that importation would harm local businesses, Ukadike disagreed. “Importation won’t kill local businesses or refineries; it will strengthen them. It will ensure local refineries step up their game. I don’t agree with Dangote on this,” he said.

The National President of the Petroleum Products Retail Outlet Owners Association of Nigeria, Billy Gillis-Harry, also opposed banning fuel imports. He argued that a free economy must avoid monopolies and maintain diverse energy sources.

“I don’t agree with Dangote. We are running a free economy. There’s no reason why any one company should have an overarching value on the entire industry.

“Importation is not killing the economy. Importation is stabilising the sources of petroleum products. Importation of all products is useful. However, those that can be produced in Nigeria, like toothpicks, garri, egusi soup, cassava, and others like that, should be banned.

“But importation of refined petroleum products should not be banned because it helps to ensure that there are multiple sources of energy and replenishment,” Gillis-Harry stated.

Expert reacts

Professor Dayo Ayoade from the University of Lagos warned that banning petroleum imports could lead to monopolistic control.

“No, we cannot have a ban on petroleum imports. It’s not a legal ban. That would not be acceptable because we don’t have diverse sources for petroleum products. We can’t rely solely on the Dangote refineries. That would give a monopoly to a private individual.

“And for the reasons of energy security and national security, that would be completely unacceptable. The government should continue to encourage, liberalise, and ensure other refineries come upstream. NNPC may want to privatise or sell off its refineries, then that’s fine. But we need to have a better base of product market before we now start to say we want to ban imports,” he said.

He added that international trade law doesn’t support outright bans.

“And you know, when we talk about bans, we have to look at international trade. International trade law does not really sit well with banning things. So, we have to be clever about how we do it. But if the market is ripe, it will be more expensive to bring in things from other countries than our own products, provided they are of sufficient quantity and the quality is fine,” the don submitted.

More refineries

At the NMDPRA conference, Dangote called for more refineries and urged the withdrawal of dormant licences.

The IPMAN spokesman agreed. “On that side, I agree with him. You can’t obtain a licence to build a refinery and use it to decorate your house. The nation needs more refineries to do more exports.”

Dangote reiterated that his refinery could meet Nigeria’s fuel needs and said efforts to undermine the facility through importation were harmful. He revealed the refinery is targeting 700,000 barrels per day capacity by December, up from the current 650,000 BPD.

Last Friday, Dangote stepped down as Director and Chairman of Dangote Cement’s Board of Directors. The Group’s Chief Branding & Communications Officer, Anthony Chiejina, said he was focusing on the $20bn refinery, petrochemicals, fertiliser, and government relations.

The refinery is currently receiving 4,000 compressed natural gas-powered trucks for its free fuel delivery scheme starting August 1. The initiative will provide petrol, diesel, and aviation fuel directly to filling stations and bulk users such as telecom companies.

Credit: The Punch