PETROAN Warns Against Monopoly, Calls for Healthy Competition in Nigeria’s Downstream Oil Sector
The Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN) has issued a strong warning against the dangers of monopolistic practices and unfair competition in Nigeria’s downstream petroleum sector. The association emphasized the need for a balanced and competitive market environment that ensures fair pricing and protects local refineries.
In a statement signed by its National Public Relations Officer, Dr. Joseph Obele, PETROAN called on regulatory authorities to play an active role in promoting fair market practices and stabilizing fuel prices. This, according to the association, would prevent market distortions that could lead to the collapse of indigenous refineries and the marginalization of independent marketers.
Unintended Consequences of the Recent Price War
PETROAN expressed concerns over the financial instability caused by the recent unexpected reduction in petrol prices, which has led to massive financial losses across the sector.
The price war began when the Dangote Refinery slashed the cost of Premium Motor Spirit (PMS) by N65 per liter. In response, the Nigerian National Petroleum Company Limited (NNPCL) followed suit, reducing its prices to maintain market share. As a result, pump prices at Dangote Refinery-affiliated outlets dropped to between N860 and N890 per liter, with Lagos offering the lowest rates. Similarly, NNPCL outlets in Lagos aligned their pricing to N860 per liter.
However, PETROAN argued that this sudden and steep decline in prices had unintended negative consequences, especially for independent marketers and retailers. Many businesses that had stocked up on petrol at higher prices suffered severe financial losses, running into billions of Naira. This instability, PETROAN warned, could discourage future investments and undermine confidence in the sector.
The Risk of Market Monopolization
Beyond price instability, PETROAN raised concerns over the potential monopolization of the downstream petroleum sector. The association noted that when a few dominant players dictate prices, smaller businesses struggle to compete, leading to reduced market diversity and an eventual monopoly.
PETROAN stressed that a monopolized market could result in:
Artificial price controls that do not reflect true market dynamics.
Exploitation of consumers due to limited competition.
Overreliance on a few large suppliers, which could lead to market vulnerability in times of crisis.
Advocating for a Diverse Supply Chain
To mitigate these risks, PETROAN strongly advocated for the promotion of multiple supply sources, which should include:
The Dangote Refinery.
NNPC-operated refineries.
Modular refineries.
Licensed importers.
This approach, the association argued, would create a competitive environment where pricing is determined by supply-demand principles rather than by the influence of dominant players. PETROAN emphasized that a diversified supply base would shield the market from undue exploitation and enhance price stability.
Balancing Imports and Local Refining Capacity
While some industry stakeholders have argued against the continued issuance of import licenses, PETROAN maintains that allowing both local production and importation is necessary to ensure fair pricing. The association noted that local refineries should be encouraged, but importation should not be completely phased out until Nigeria achieves full self-sufficiency in refined petroleum products.
Additionally, PETROAN pointed out that relying solely on domestic refineries without an alternative supply mechanism could expose the country to production shortfalls, maintenance shutdowns, and operational disruptions, which would negatively impact consumers.
The Role of Regulatory Bodies
To ensure a well-regulated and fair market, PETROAN called on the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) and the Federal Competition and Consumer Protection Commission (FCCPC) to:
Monitor pricing strategies to prevent anti-competitive practices.
Implement policies that encourage healthy competition among all players.
Support independent marketers to remain viable in the industry.
Ensure transparency in the approval of import licenses and refinery operations.
Supporting Local Refineries for Economic Growth
While advocating for a competitive market, PETROAN also reiterated the need to strengthen local refining capacity. The association highlighted several benefits of supporting indigenous refineries:
Increased domestic production: Reducing Nigeria’s dependence on imported fuel.
Job creation and economic growth: Boosting employment opportunities in the petroleum industry.
Improved energy security: Shielding the nation from fluctuations in international oil prices.
Foreign exchange savings: Reducing the pressure on the naira by minimizing fuel imports.
The ongoing price war in Nigeria’s downstream petroleum sector underscores the urgent need for a well-regulated, competitive, and diversified market. PETROAN’s warnings highlight the potential risks of monopolization, price instability, and the financial strain on independent marketers. The association’s call for multiple supply sources, fair regulatory oversight, and strong support for local refineries presents a viable path toward a more sustainable and equitable petroleum industry in Nigeria.
To achieve this, the government and regulatory bodies must step up their efforts to maintain a balance between competition, consumer protection, and industry growth, ensuring that all stakeholders—including independent marketers—can thrive in a fair and transparent market environment.
Reference
PETROAN Warns Against Monopoly, Calls for Healthy Competition in Nigeria’s Downstream Oil Sector