The Natural Oil and Gas Suppliers Association of Nigeria (NOGASA), on Thursday called on President Bola Tinubu to intervene in the plan by the Dangote Refinery to begin direct distribution of petroleum products, expressing concerns that the development will lead to a monopoly and run the middleman out of business.
Speaking at a meeting of the organisation on Thursday in Abuja, National President of NOGASA, Benneth Korie, explained that although the oil and gas suppliers weren’t against working with the management of the 650,000 barrels per day facility, it must play by the rules.
NOGASA urged Tinubu to stop the plan to throw its members out of business and maintain a stronghold on the petroleum products distribution network by the refinery, which has already received about 4,000 Compressed Natural Gas (CNG) truckspreparatory to the August 15 take-off of the initiative.
Korie recalled the persistent support for the refinery by NOGASA during its difficult days, urging that more consultations must be carried out to get the buy-in of the downstream sector, rather than trying to railroad everybody.
He said: “We are pleading with Mr President to intervene in this matter by telling Dangote to slow down and go by the rules of the game. Nobody is against the refinery. If there’s anybody that supported Dangote refinery, more than anything, it’s this association, NOGASA, 100 per cent.
“But when this thing came up, we said no, we need to advise, we need to give you an idea how to go about it, even though we’ve never one day sat with him. He has never one day invited us.”
In June, while announcing the plan to take over its own distribution network, the refinery said it had invested over N720 billion to implement the initiative of deploying 4,000 CNG trucks for the nationwide distribution of petroleum products, which it said is expected to save Nigerians over N1.7 trillion annually.
This bold step, it stressed, will see the privately-owned refinery absorb over N1.07 trillion annually in fuel distribution costs, with the initiative poised to significantly benefit over 42 million Micro, Small and Medium Enterprises (MSMEs) by reducing energy costs and enhancing profitability.
Besides, Dangote stated that the initiative will eliminate transportation costs for fuel marketers and large-scale consumers and help reduce pump prices and inflation, explaining that at its commencement, the refinery will begin the direct delivery of petrol and diesel to filling stations, industrial facilities, and other high-volume consumers.
According to a statement from the refinery at the time, it aims to meet Nigeria’s daily consumption of 65 million litres of refined petroleum products, including 45 million litres of petrol, 15 million litres of diesel, and 5 million litres of aviation fuel.
“With the average logistics cost estimated at N45 per litre, the refinery will cover over N1.07 trillion annually in free distribution expenses,” the refinery had stated.
But the NOGASA’s National President, Korie, during the briefing, stated that the organisation was scared of the impact of a monopoly in the downstream oil sector.
He added: “During our last meeting, we supported the completion of the refinery, but most of our members are afraid of the giant monopoly. The entire giant’s inter-direct distribution of their own products with the purchase of 4,000 distribution trucks for nationwide supply makes us worried about staying in the business.
“We wish to assure that they consider the small suppliers who depend on those business employee levels. We need to work with them to ensure that our business survives for the mutual benefit of all involved.”
Describing the association as pillars of the Nigerian economy, Korie maintained that with proper consultations, the situation could result in a win-and-win for both suppliers and end-users of petroleum products.
Besides, Korie contended that the oil and gas suppliers have the capacity to get the job done, urging the Dangote refinery to face its core business of refining petroleum products.
“We are capable of distributing products. All we need you to do is blend, sell to depot owners, and they will go there and buy, and distribute to the end users. That way you balance the system.
“If you have 1,000 staff in Dangote working, and then here, we have 3,000 workers, we have 4,000 Nigerians benefiting from that business. But when you ask the remaining 3,000 people to go home, you have only 1,000,” NOGASA argued.
In his intervention, the National President of the Petroleum Products Retail Outlet Owners Association of Nigeria (PETROAN), Dr Billy Gillis-Harry, also expressed fears over the tendency of a monopolistic market.
He said: “One company wants to refine, one company wants to stock, and one company wants to do the logistics of distribution, and one company wants to fix prices. So that one company is going to be both a businessman and a regulator. And so many Nigerians don’t seem to understand the dynamics of the difficulty.”
Drawing from the recent experiences in the cement industry, he stated that the dominance of the company in that sector has not led to reduction in cement prices which has over the years gone from N115 for a bag of cement to over N10,000.
“We also have similar situations in our cement industry, where you are seeing the same trucks supplying cement… Have you bought cement for N115 again? From N115, we are buying now for 10,000 plus,” he said.
Also speaking, the Chairman, House Committee on Petroleum Resources, downstream, Ikenga Ugochinyere, represented by Ahmed Saba, member representing Edu/Moro/Patigi Federal constituency in Kwara, said the lawmakers were watching the dynamics of the sector closely.
“We are particularly attentive to the recent entry of Dangote into downstream distribution and marketing and its potential impact on existing distributors. This is a significant development and we want to assure you that we are meticulously looking into this situation,” he added.
Emmanuel Addeh
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