DAPPMAN Raises Alarm Over Dangote Refinery’s Potential Market Control

The Depot and Petroleum Products Marketers Association of Nigeria (DAPPMAN) has expressed concerns regarding the potential monopolistic control that the Dangote Refinery could exert over Nigeria’s fuel market once it becomes fully operational. DAPPMAN’s alarm comes as the refinery, with a refining capacity of 650,000 barrels per day, moves closer to meeting Nigeria’s domestic fuel needs, which could significantly reduce the country’s dependence on fuel imports. While this shift towards self-sufficiency is largely seen as positive for Nigeria’s economy, DAPPMAN is raising red flags over the implications of such dominance in the market.

In an interview with the media, DAPPMAN’s Executive Secretary, Olufemi Adewole, made it clear that while the refinery’s contributions to the nation’s energy security are acknowledged, its potential to overshadow smaller players in the sector poses risks. Adewole noted that depot owners and other private sector participants who have invested heavily in the oil and gas sector over the years could be adversely affected by the Dangote Refinery’s market power. He pointed out that these stakeholders have supported the industry through various challenges, including when the country faced fuel shortages, and their investments deserve protection.

The central concern raised by DAPPMAN revolves around the refinery’s ability to control a significant portion of the fuel market, particularly if fuel imports are completely halted before the refinery reaches full production capacity. Adewole emphasized that while the Dangote Refinery is a monumental step toward Nigeria’s goal of energy independence, it is unlikely to be able to meet the entire country’s fuel demand right away. “Stopping fuel imports prematurely would give the Dangote Refinery undue control over the market, potentially leading to price hikes and reduced competition,” he warned.

The association has been vocal in advocating for a phased transition that would allow the market to adjust gradually to local refining capabilities. Adewole also called for the government to ensure that the refinery does not monopolize the sector, urging that measures be taken to maintain a competitive environment within the Nigerian petroleum industry. DAPPMAN’s concerns are not just about market control but also about the broader implications for fair pricing and availability of petroleum products. The group has also pointed out that a monopoly could undermine the objectives of the Petroleum Industry Act (PIA), which seeks to deregulate the industry and encourage competition.

Furthermore, DAPPMAN has petitioned President Bola Tinubu to intervene in this issue to prevent the Dangote Refinery from becoming too dominant. The petition stresses that the refinery’s market control could potentially undermine the investments made by smaller players in the sector and disrupt the competitive market that the PIA aims to create. Adewole made it clear that while the Dangote Refinery is a significant asset to Nigeria, the government must ensure that it operates within a framework that promotes market fairness.

The Dangote Refinery, located in the Lekki Free Trade Zone, is one of the largest single-train refineries in the world and holds the promise of transforming Nigeria’s oil industry by eliminating the need for fuel imports. However, DAPPMAN’s concerns highlight a critical issue: the refinery’s ability to exert considerable market influence and potentially stifle competition. With the refinery expected to produce products like petrol, diesel, and kerosene, its operational capacity will be a game-changer for the Nigerian energy market, but its success could depend heavily on how it integrates into the existing market structure.

As discussions around the Dangote Refinery’s market impact continue, the industry is closely watching the government’s stance on the matter. Key stakeholders, including DAPPMAN, believe that regulatory measures should be put in place to ensure a balanced and competitive market. A key aspect of this debate is whether Nigeria’s energy sector can manage the introduction of such a significant player while maintaining a level playing field for existing operators.

While DAPPMAN acknowledges the long-term benefits of the Dangote Refinery, such as the creation of jobs and the reduction of fuel imports, the organization remains firm that a comprehensive and strategic approach is necessary to safeguard the interests of all players in the sector. This includes giving smaller, independent marketers the opportunity to compete fairly and ensuring that the local fuel market remains diverse and accessible to all Nigerians.

In conclusion, as the Dangote Refinery nears full operational capacity, the conversation about its role in Nigeria’s fuel market continues to evolve. The Nigerian government now faces the challenge of balancing the national interest of reducing fuel imports with the need to preserve market competition and protect the livelihoods of smaller businesses. DAPPMAN’s concerns, therefore, represent a significant part of the broader discussion on how Nigeria’s energy sector should develop in a way that benefits all stakeholders while promoting sustainable growth.