The Dangote Refinery’s recent announcement that it will begin the nationwide distribution of petrol and diesel from August 15 has sparked renewed debate about the future of Nigeria’s petroleum sector.
While many see the move as a breakthrough in achieving domestic refining capacity, others, including industry stakeholders, warn that it could tilt the market dangerously towards monopoly.
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In a statement on Monday, the Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN) raised alarm bells, calling on regulators to intervene before it is too late.
But the reality of decades-long refinery failures also raises a question: is Dangote Refinery simply dominating a space others failed to fill, or is it positioning itself to control the downstream sector?
In this report, EKO HOT BLOG examines all the flashpoints.
PETROAN: Dangote’s Strategy Could Force Filling Stations to Quit the Market
In the statement signed by its National PRO, Joseph Obele, PETROAN warned that Dangote Refinery’s forward integration strategy could lead to a disguised monopoly and pose a significant threat of job losses in Nigeria.
With a production capacity of 650,000 barrels per day, the association argues that Dangote Refinery should be competing with global refineries, not operating as a distributor in the downstream sector.
It specifically cited plans by Dangote to distribute directly to consumers through its own network of 4,000 compressed natural gas (CNG)-powered trucks. According to PETROAN, this move “poses a significant threat to the livelihoods of thousands of truck drivers and owners” and could result in “widespread job losses in the industry”.
The association also warned of a “pricing penetration strategy” where prices are lowered to capture market share, with the ultimate goal of forcing other filling station operators to exit the market.
“Their operations and market share may be threatened by Dangote’s dominance,” PETROAN cautioned, pointing to local suppliers, telecom diesel vendors, and modular refineries as among those most at risk.
Billy Gillis-Harry, PETROAN’s national president, urged regulators to act swiftly, saying the executive director of the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) and the Minister of State for Petroleum should implement price control mechanisms to prevent any form of monopoly. Gillis-Harry said competition must always be encouraged to protect consumers and promote economic efficiency.
Why Dangote Dominates: A Vacuum Created by State-Owned Refinery Failures
While PETROAN’s concerns are not unfounded, many experts argue that the dominance of Dangote Refinery stems from the systemic collapse of Nigeria’s state-owned refineries rather than deliberate market capture.
For over two decades, the Port Harcourt, Warri, and Kaduna refineries have remained largely dormant, operating well below their combined capacity of 445,000 barrels per day. Billions of dollars earmarked for their rehabilitation have yielded little progress.
The recent arrests of former NNPCL officials by the Economic and Financial Crimes Commission (EFCC) have further exposed deep-rooted issues of corruption and mismanagement. President Bola Tinubu’s dismissal of former NNPCL boss Mele Kyari was part of a broader effort to restructure the oil sector and restore investor confidence.
Experts such as Professor Wumi Iledare, a Professor of Petroleum Economics and Policy Research and Director of the Energy Information and Data Division at the Centre for Energy Studies, have attributed the failures to “transactional leadership” and a culture that values political loyalty over technical competence.
The net effect has been devastating. Nigeria, despite being Africa’s top crude oil producer, still imports most of its refined fuel — a paradox that has driven up prices and made the country vulnerable to global market shocks.
Dangote Refinery: A Monopoly, or a Market-Driven Necessity?
With a refining capacity of 650,000 barrels per day, Dangote Refinery is positioned to reduce Nigeria’s dependence on imports, stabilise fuel prices, and potentially increase supply chain efficiency.
Critically, its entry comes at a time when fuel subsidies have been removed and pricing is now determined by market forces. In this context, a player like Dangote, with scale and logistics, can help bring prices down, at least in the short term.
Still, PETROAN’s argument remains: “It is obvious that Dangote plans to gain full monopoly of the downstream sector, which would enable the company to exploit Nigeria’s petroleum consumers.”
FURTHER READING
Whether this becomes reality depends largely on government oversight and the competitive landscape.
Philip Ibitoye is a Special Correspondent with EKO HOT BLOG. Click here to find daily analysis and critical insight on trending issues in Lagos and other parts of Nigeria.
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