Editorial by Huhuonline, Tuesday November 5, 2024
The news that oil marketers in Nigeria plan to sell imported petrol at a price lower than what is offered by the Dangote Petroleum Refinery has once again highlighted the vexing issue of monopolistic control in Nigeria’s oil sector. The recent revelation that the Dangote Refinery is selling Premium Motor Spirit (PMS) at an exorbitant price between N1,015 and N1,028 per liter is appalling and raises fundamental questions about fairness, transparency, and the national interest. This situation is symptomatic of a flawed system that unfairly stifles competition and, in turn, burdens the Nigerian people with artificially inflated prices for essential commodities.
When a single entity, especially one with the reach and resources of the Dangote Group, commands such a pivotal industry, it raises a fundamental question: who is truly benefiting? As Nigeria stands on the brink of a fuel crisis caused by a scarcity of refining options and inflated prices, it is crucial for President Bola Tinubu to confront this monopolistic control head-on and demand decisive action from regulatory bodies to protect consumers.
In an economic environment that cries out for competitive pricing and transparency, the Dangote monopolistic grip on Nigeria’s oil sector presents a clear and present danger to the nation’s economy and the welfare of the Nigerian people. The Dangote Refinery’s outsized influence has left the Nigerian oil market at the mercy of one man’s commercial ambitions. Far from benefitting the nation, this monopoly has tightened the noose around the neck of the average Nigerian, forcing them to bear inflated costs while enduring the economic consequences of restricted competition. Dangote’s control means fuel pricing remains opaque, unregulated, and wholly susceptible to self-interested profiteering at the expense of the Nigerian public. When one private entity is allowed to dominate a vital industry that directly impacts the cost of transportation, food, and other basic commodities, the socioeconomic consequences are catastrophic.
As the sole major local refinery, Dangote’s decision to price fuel well above the cost of imports not only reflects an appalling lack of empathy for the financial struggles of ordinary Nigerians but also exposes a calculated attempt to stifle any possible competition. Oil marketers have announced plans to import fuel and offer it at a significantly lower price than Dangote’s, illustrating a stark contrast in the ethical and market practices between independent players and a monopolistic behemoth. Quite predictably, marketers under the aegis of the Petroleum Retail Outlet Owners Association of Nigeria have vowed to import and sell petrol below the price offered by the Dangote refinery and the NNPCL. Dr. Joseph Obele, PETROAN Publicity Secretary, disclosed that PETROAN “had struck deals with some international fuel suppliers to import and sell PMS at a price around N800/litre… And we assure you that PETROAN will sell far less than Dangote. It will sell at prices far less than NNPC. Right now, NNPC is selling to us at N1,040/litre. PETROAN will not sell like that, because we have negotiated. And all our partners and foreign counterparts are on standby to make sure we give Nigerians the best value,” Obele said.
But the ability to exercise this option is hindered by the influence of the Dangote Group, which has allegedly pressured regulatory authorities to curb importation, aiming to force Nigeria into dependence on his refinery. If allowed to persist, this monopoly will only exacerbate the challenges facing Nigeria’s struggling economy and deepen the financial distress endured by millions.
Adding salt to the injury, Dangote’s monopoly has also restricted access for independent marketers, particularly small-scale marketers, who are now struggling to remain viable amidst Dangote’s steep wholesale prices and opaque practices. Dangote currently sells fuel at slightly lower rates to bulk buyers (N1,015/liter) while pricing it at N1,028 for smaller-scale buyers. This pricing scheme is indicative of Dangote’s attempts to centralize control, thereby pushing out independent players who could otherwise provide competitive pricing. Such practices stifle small businesses, erode market diversity, and ultimately rob consumers of any chance at a fair market price.
Even more concerning is the apparent collusion, or at the very least, the lack of regulatory intervention that allows this monopoly to flourish unchecked. The Nigerian National Petroleum Company Limited (NNPCL), which should serve as a regulatory force or at least a balancing competitor, seems complacent in supporting Dangote rather than advocating for fair prices. Rather than leveraging its authority to regulate prices transparently and ensure competitive practices, NNPCL’s silence on Dangote’s wholesale price has fueled speculation and contributed to public mistrust. This passive alignment with the Dangote monopoly is symptomatic of a wider systemic issue in Nigeria’s oil sector, where profit motives have eclipsed the national interest.
Moreover, the lack of transparency surrounding Dangote’s cost structure exemplifies an alarming disregard for consumer rights. While every marketer and importer must disclose their costs and follow regulatory guidelines, Dangote’s pricing strategies remain elusive and shrouded in secrecy. When pressed, representatives of the Dangote Group dismiss price inquiries as “fake news,” a callous attempt to sidestep accountability. This dismissive attitude toward legitimate concerns underscores a troubling dynamic where Dangote’s corporate interests are placed above national transparency requirements. When a business can dismiss public inquiry without consequence, it poses an existential threat to both market transparency and consumer trust.
The Nigerian government’s unwillingness to foster a diversified oil market is setting a dangerous precedent. Allowing Dangote to monopolize the refining and distribution of fuel sets Nigeria on a perilous path where one man’s enterprise determines the financial health of an entire nation. In a fair market, prices are shaped by healthy competition, which drives down costs and incentivizes efficiency. However, under the current conditions, Dangote’s monopolistic control allows him to dictate prices unchallenged, resulting in higher fuel costs that will inevitably cascade down to the cost of food, transportation, and basic goods for Nigerians. If President Tinubu does not take action to break up or at least check the growth of this monopoly, it risks condemning Nigerians to ongoing hardship under an unregulated, profit-driven corporate structure.
At this critical juncture, the Nigerian government must prioritize the welfare of its people over the interests of Dangote. The Nigerian oil sector needs robust reforms that break up monopolistic structures, restore transparency, and encourage competition. Regulators, particularly the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), must exercise their mandate to check any undue influence that stifles market diversity. This includes granting licenses to more independent marketers and reducing bureaucratic barriers to fuel importation, thereby enabling Nigerians to access fuel at a fair and reasonable cost.
The Nigerian people deserve better than a monopolized oil sector that subjugates them to unbridled corporate greed. Nigeria’s economic strength is rooted in its diversity and the entrepreneurial spirit of its people, not in the monopolistic aspirations of one corporation. Dangote’s dominance over Nigeria’s oil industry is an affront to the principles of fair trade and a glaring example of corporate overreach. A responsible government would step in and dismantle such a monopoly, especially when it jeopardizes national welfare.
Fostering an open, competitive oil market would provide relief to Nigerians and ensure a more stable, prosperous economic future. Dangote’s control over Nigeria’s oil sector has reached an alarming level, that threatens the nation’s economic health and undermines consumer rights. As fuel prices soar and independent players are pushed to the sidelines, it is time to call out this monopoly for what it is: an unethical, unsustainable stranglehold on Nigeria’s oil sector. The time has come for Nigeria to prioritize its people, dismantle monopolies, and commit to a transparent, competitive oil sector. The future of the Nigerian economy and the well-being of its citizens depends on it.