Sopuruchi Onwuka

Players in the domestic fuel who market have raised concerns over direct loading of tankers at the Dangote Refinery in Lagos are no longer lone wailers in the market as the Africa’s biggest private refiner is said to be working on plans to float its own fuel retail brand.

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Some marketers who spoke with The Oracle Today confirmed that they have been informed of the moves by the Africa’s richest man and biggest debtor to float a petroleum products marketing company to assist with rapid commercialization of the refinery’s products.

Dangote which holds strategic retail alliance with some fuel marketing companies in the country appears to be impatient in making fast cash recovery from the domestic market where several marketers including the Nigerian National Petroleum Company (NNPC) Limited continue to compete with imported petroleum products.

The survival of importers in the Nigerian domestic fuel market, The Oracle Today gathered, continue to baffle the billionaire industrialist whose refinery has been leading price competition in a visible move to choke out supply rivals.

A member of the Depot and Petroleum Products Marketers Association of Nigeria (DAPPMAN) told our correspondent that the Dangote Refinery has since abandoned structured distribution channels in the domestic fuel market to sell directly to retailers that approach the refinery with trucks.

Our source stated that such a direct interface with retail players posed serious survival challenge to DAPPMAN members who, according to him, invested heavily in providing storage and sundry holding facilities for ease of fuel flow in the domestic market.

“Most of the tanks you see at the depots are empty,” he said, adding that retail players simply take their trucks straight to the Dangote refinery to load products even at discounted prices.

He also noted that the Dangote refinery also provides incentives for cash backed purchases, an incentive that further pushes depot owners back from the refinery.

Our source pointed out that only retail stations in remote areas places distant from the Dangote Refinery currently hold stock for importers and the NNPC Limited which, according to him, takes the responsibility to meet demand in every corner of the country.

The Oracle Today reports Dangote Refinery holds strategic fuel distribution agreements that confers advantages to some select marketing companies in the country, including MRS. Other marketers have criticized the alliances as discriminatory and subtle attempt at creating an oligopoly that never existed in the domestic petroleum market.

The fuel retail alliances created by Dangote had polarized that market among retailers that show loyalty to same supply sources including NNPC Limited, Major marketing companies like TotalEnergies that are affiliated to offshore refineries and some small local refineries that do not produce petrol.

Our checks showed that fractionalization of the fuel market has split the market among suppliers and limited that expected capacity of Dangote’s affiliates in the market to haul out larger volumes of products from the refinery.

An analyst known for defending investments in Dangote Refinery argued in a discussion with our correspondent that greenfield refinery sits on nearly $20 billion debts that takes a lot of money to service. He noted the urgency in pushing cash recovery from the market in order to enable the company blow down its debts and associated costs.

Managing Director of petroleum products marketing company finds nothing wrong with Dangote’s move to float a marketing company.

“People harbor vain fears! We have seen new companies enter the market almost on daily basis. So, what is wrong if it is Dangote? The market is huge and still developing. So, I think any new player is welcome.”

In a seminar with journalists, the Major Energy Marketers Association of Nigeria (MEMAN) warned against replacing public sector monopoly with private sector monopoly in the domestic fuel market.