The Dangote Refinery, a landmark project in Nigeria’s oil and gas sector, is facing criticism from depot owners and marketers, who allege its pricing strategy is disrupting business operations. The Depot and Petroleum Products Marketers Association of Nigeria (DAPMAN) and the Major Oil Marketers Association of Nigeria (MOMAN) have expressed concern over abrupt price reductions by the refinery, claiming they could destabilise the sector.
Depot Owners Push Back
Depot owners, under the umbrella of DAPMAN, lament that a sharp price slash of ₦70.5 per litre by Dangote has caused significant disruption. According to them, the move undermines those holding existing stock, as they are unable to compete with the sudden reductions. “Price reductions should be implemented strategically, not abruptly, especially when depot owners already have stock. It’s killing our business,” a spokesperson for DAPMAN said.
The issue has raised calls for the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) to intervene. DAPMAN insists that the regulatory body must ensure a level playing field in pricing and operations across the sector.
Calls for Strategic Pricing
Marketers are urging Dangote Refinery to adopt a more calculated approach to price adjustments, suggesting that sudden shifts could destabilise businesses reliant on existing inventory. Many argue that price changes should reflect broader market trends and give stakeholders ample time to adapt.
In addition, some marketers insist that the Dangote Refinery should focus on refining operations rather than competing in the downstream sector by engaging in gantry business. “Dangote should face refinery operations and allow depot owners to manage distribution. Competing at both levels puts undue pressure on the industry,” one marketer suggested.
NMDPRA’s Role in Oversight
Stakeholders are now looking to NMDPRA to mediate and address these concerns. The authority, responsible for regulating Nigeria’s downstream oil and gas sector, is being urged to ensure fair competition while protecting smaller players in the industry.
A Balancing Act
The Dangote Refinery, celebrated as Africa’s largest single-train refinery, holds a strategic position in Nigeria’s energy future. However, its dual role as a producer and distributor is being scrutinised for its potential impact on competition. Industry analysts believe that for the refinery to succeed while maintaining market stability, it must strike a balance between pricing innovation and industry sustainability.
As the situation unfolds, all eyes remain on the NMDPRA and Dangote Refinery’s next steps. Stakeholders are hopeful that a resolution can be reached to ensure the long-term health of Nigeria’s oil and gas sector.