Business
Dangote Refinery, fuel marketers standoff sparks consumer price fears
The intensifying standoff between Dangote Refinery, led by billionaire Aliko Dangote, and Nigeria’s local fuel marketers is rippling through the Nigerian economy, heightening concerns over fuel prices for consumers.
Dangote, the CEO of Africa’s largest refinery, with a 650,000 barrels-per-day capacity, insists that fuel supply is not an issue, asserting that his refinery currently holds an inventory of 53 million liters of petrol.
However, local fuel marketers argue that relying solely on Dangote’s refinery could inflate prices and limit market options, potentially pushing the cost per liter even higher.
In a firm statement to local fuel marketers and the Nigerian National Petroleum Corporation (NNPC), Dangote urged them to source their fuel directly from his refinery instead of importing.
“I’m expecting either NNPC or marketers to stop importing and come to collect. We have what they need,” he stated. He noted the high financial burden of holding massive fuel stocks, estimating a 32 percent annualized holding cost on 500 million liters due to inflationary pressures.
“If I could collect the naira today, I’d charge someone 32 percent interest. Right now, that’s my loss of 500 million liters,” he remarked.
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Yet, prominent groups like the Independent Petroleum Marketers Association of Nigeria (IPMAN) and the Petroleum Retail Outlet Owners Association of Nigeria (PETROAN) have expressed reservations.
PETROAN’s Publicity Secretary, Dr. Joseph Obele, warned that relying on local supply alone may be insufficient to stabilize prices, with estimates suggesting that imported fuel could soon cost around N800 per liter.
He indicated PETROAN’s intent to offer competitive prices, possibly undercutting both Dangote and the NNPC.
In response, Dangote countered that such low pricing in a deregulated market would be unsustainable without compromising quality, hinting that only substandard fuel could match those rates.
The standoff emerges as Nigeria’s fuel market adjusts to a recent deregulation initiative under the Petroleum Industry Act (PIA), designed to liberalize the market and foster competition.
Ayodele Oni, a senior partner at Bloomfield Law, noted that the PIA permits private entities like Dangote’s refinery to set their own prices, while marketers have the flexibility to either import fuel or buy locally.
“This is a pivotal moment for Nigeria’s fuel sector. Deregulation opens up competition, but it also means price fluctuations,” Oni said. He acknowledged, however, that the policy shift exposes consumers to market vulnerabilities in the absence of government intervention.
In light of the growing tension, energy expert Adewale Oginni urged the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) to mediate discussions between Dangote and local fuel marketers to prevent further price volatility.
“Without NMDPRA’s involvement, consumers will continue to bear the brunt of price swings,” Oginni warned, emphasizing the need for structured talks to ensure fair pricing and supply stability.
The debate has also raised concerns among consumer advocates. Human rights lawyer Barrister Isaac Ishaku accused both Dangote and the government of favoring corporate interests over consumer welfare, arguing that current policies overwhelmingly benefit large corporations.
“They’re all in on it—Dangote and the government,” Ishaku remarked, calling for policies that protect consumers instead of prioritizing private sector profits.
The issue is further complicated by accusations between Dangote Refinery and local marketers over substandard fuel quality, with regulatory consequences potentially on the horizon.
As tensions persist, the Nigerian fuel market remains in flux, and consumers continue to brace for potential price hikes and supply disruptions amid calls for a regulatory resolution.