₦airaland Forum

It is crucial to start this by acknowledging the importance of Dangote Refinery as a turning point in Nigeria’s oil and gas downstream sector. For nearly 40 years, the country has relied on imports to meet its energy needs, even though Nigeria is a major crude oil producer and the government has built three refineries.

This situation has caused a lot of contention for the country, including the introduction of fuel subsidies to provide a cushion for impoverished citizens in the country at the mercy of international markets.

The completion of the $20 billion Dangote Refinery is a monumental achievement. With a projected capacity of 650,000 barrels per day, it is the largest single-train refinery in the world and a symbol of industrial ambition with the potential to change the lives of Nigerians for the better or worse.

The Dangote Refinery can become a catalyst for healthy competition, accelerating the development of the downstream sector, or a monopolistic force that stifles competition, dictates prices, and undermines the broader goals of economic inclusion. The direction the refinery takes will be decided by the actions of Nigeria’s regulatory agencies.

The Promise and the Peril
The Dangote Refinery promises to transform Nigeria’s energy landscape. We can already see the added benefits of local production in the stabilisation of the naira against the dollar as the country saves billions in foreign exchange and reduces its reliance on imported refined petroleum products. But, there have also been concerns about how the Dangote Refinery, which, despite its scale, intends to achieve vertical integration, will stay profitable without artificial market dominance.

Moves made in the company’s first year of operations suggest the Dangote Refinery is looking to replicate its attempts at a forced monopoly in other sectors in the downstream oil and gas sector. The refinery has already sought to disrupt the complex logistical network that ensures petroleum reaches final consumers by introducing a ‘free’ delivery service targeting major retailers, in a bid to incentivise them to ditch their long-term relationships with importers and depots and to buy products exclusively from the refinery. Industry stakeholders have condemned this move as predatory.

The Dangote Refinery has also been accused of abruptly lowering ex-depot petroleum prices and bearing the cost differential to undercut importers who cannot bear the losses incurred by this tactic. Already, many major importers and depots have been forced to shutter their businesses or risk bankruptcy. When challenged on the integrity of its tactics, the Dangote Refinery has defended its actions as healthy market competition.

A monopoly, even one born from private investment and innovation, can distort markets. It can lead to price manipulation, limit consumer choice, and create barriers for new entrants. In the absence of robust regulatory oversight, the very infrastructure meant to empower the economy could end up concentrating power in the hands of a few.

The Mandate of Regulators
Nigeria’s regulatory bodies, particularly the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), the Federal Competition and Consumer Protection Commission (FCCPC), and the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), have a constitutional and moral obligation to safeguard the principles of fair competition.

It is their responsibility to ensure transparency in all business practices, monitor market behaviour and intervene when predatory actions are taken against competitors or consumers, even when they are ‘legal’. They must also enforce anti-trust laws and deter larger corporations from engaging in anti-competitive practices that marginalise smaller marketers. But most importantly, it is their responsibility to provide a favourable environment for new entrants into the downstream sector, and by doing so, ensure the energy sector remains resilient and dynamic.

The Dangote Group is only as big and successful as it is today because regulatory agencies ensured indigenous entrepreneurs were protected from monopolistic manoeuvres from international competitors. The same consideration must now be extended to other players in the energy sector to balance industrial ambition and market fairness. The Dangote Refinery represents a significant advancement towards self-sufficiency, but that doesn’t exempt it from the same standards of accountability that any other market participant must adhere to.

A Delicate Balance
Nigeria stands at a crossroads. The emergence of the Dangote Refinery offers a rare opportunity to redefine the country’s energy future. The refinery may be privately owned, but the market it operates in belongs to the people.

The future of the energy sector is the responsibility of the agencies tasked with ensuring that Nigerians reap the benefits of deregulation and that companies maximise the opportunities a free market offers Nigerian entrepreneurs. If local regulators rise to the occasion, they can ensure that this refinery becomes a cornerstone of shared prosperity, not a symbol of concentrated power.

Olatunde Adebanjo, lawyer and real estate advisor based in Lagos, writes on the intersection of law, real estate, and public policy.

Olaide1295:
Actually, valid points raised.
We must ensure the Dangote refinery survives. But must also ensure to allow some form of competition.

Qtsnow:
https://thenationonlineng.net/market-economics-the-responsibility-of-nigerian-regulators-in-preventing-a-dangote-refinery-monopoly/

Olaide1295:
Actually, valid points raised.
We must ensure the Dangote refinery survive and continue to expand.Even though it’s in a free trade zone and pays no corporate taxes.
But must also ensure to allow some form of competition from imports.
I’m not sure I agree a 15% tariff on imports is needed.

Gotocourt:
Competitors wey no get shishi

Qtsnow:
https://thenationonlineng.net/market-economics-the-responsibility-of-nigerian-regulators-in-preventing-a-dangote-refinery-monopoly/

Babalegba:
I'm not sure if people
are retarded or just plain daft. Dangote cannot have a monopoly in oil refining, there are several other refineries being built that will become operational soon.
There is also the fact that the petrol importers can import petrol anytime Dangote misbehaves.

ADAMUdaCOWBOY:
and there are several other private refineries

Babalegba:
I'm not sure if people
are retarded or just plain daft. Dangote cannot have a monopoly in oil refining, there are several other refineries being built that will become operational soon.
There is also the fact that the petrol importers can import petrol anytime Dangote misbehaves.

Babalegba:
I'm not sure if people
are retarded or just plain daft. Dangote cannot have a monopoly in oil refining, there are several other refineries being built that will become operational soon.
There is also the fact that the petrol importers can import petrol anytime Dangote misbehaves.

Qtsnow:
https://thenationonlineng.net/market-economics-the-responsibility-of-nigerian-regulators-in-preventing-a-dangote-refinery-monopoly/

Olaide1295:
Actually, valid points raised.
We must ensure the Dangote refinery survive and continue to expand.Even though it’s in a free trade zone and pays no corporate taxes.
But must also ensure to allow some form of competition from imports.
I’m not sure I agree a 15% tariff on imports is needed.

SolomonGrandi:
You’re missing the point

Olaide1295:
Actually, valid points raised.
We must ensure the Dangote refinery survive and continue to expand.Even though it’s in a free trade zone and pays no corporate taxes.
But must also ensure to allow some form of competition from imports.
I’m not sure I agree a 15% tariff on imports is needed.

Olaide1295:
Actually, valid points raised.
We must ensure the Dangote refinery survive and continue to expand.Even though it’s in a free trade zone and pays no corporate taxes.
But must also ensure to allow some form of competition from imports.
I’m not sure I agree a 15% tariff on imports is needed.

Omalicious1:
I disagree in totality with the writer.

Let the Federal government ensure that the 3 refineries are working and also individuals that have the capacity to start their own refineries do same also, and the rest will be history.

So that nobody will be talking about monopoly.

Princecalm:
Jul 29, 2015

The Nigerian National Petroleum Corporation has announced that the Port Harcourt and Warri refineries have been successfully re-streamed after a nine-month rehabilitation exercise conducted by its in-house engineers and technicians.

The corporation, in a statement, noted that both plants commenced preliminary production of petroleum products after successful test-runs, adding that while PHRC was ramping up its operation to about 60 per cent of its 210,000 barrels per day capacity, WRPC production was projected to hit 80 per cent of its installed 125,000bpd capacity.

The NNPC said the Port Harcourt refinery was projected to boost the nation’s local refining capacity with a product yield of five million litres of petrol per day, while Warri refinery would contribute 3.5 million litres of petrol.

Providing insight into the rehabilitation exercise, the NNPC noted that it had to adopt the phased rehabilitation strategy after the Original Refinery Builders, who were initially contacted for the project came up with unfavorable terms.

It said, “Though a decision was taken in 2011 to rehabilitate all the refineries using the ORB of each of the refineries, we were impelled to switch strategy after the ORBs declined participation and nominated some partners in their stead who came up with outrageously unfavorable terms.”

The NNPC stated that the nominated partners, as sole-bidders, came up with humongous price offers after two years of thorough and exhaustive scope of work definition and price negotiations.

It added that the proxies were also unwilling to provide post rehabilitation performance guarantees.

The corporation said, “The phased rehabilitation strategy which entailed phased and simultaneous rehabilitation of all the refineries using in-house and locally available resources in line with the spirit and letter of the Nigerian Content Law, also involved the use of Original Equipment Manufacturer representatives to effect major equipment overhaul and rehabilitation.”

The national oil firm said the phased rehabilitation programme, which started in October 2014 after the required funding stream was established, created a 70 per cent reduction in costs which helped largely in mitigating the financing challenges of refinery rehabilitation.

It observed that with the successful re-streaming of the PHRC and WRPC, attention has now moved to the 110,000 barrels per day Kaduna Refining and Petrochemicals Company which was billed to come on stream soon.

http://www.punchng.com/news/pharcourt-warri-refineries-commence-preliminary-operations-nnpc/

saintopus:
The PH Refinery ships its first export of petroleum products to Dubai.
The company is expected to load the cargo in the coming days onboard the Wonder Star MR1 ship, signalling the commencement of operations at the plant and the exportation of petroleum products.

The ship will load 15,000 metric tons of the product, which translates to about 13.6 million litres.

Although the volume coming from the NNPC into the global market is still small, the development has the potential to impact the Very Low Sulphur Fuel Oil (VLSFO) benchmarks in the future while changing the market realities for Atlantic Basin exporters into Nigeria and other regions.

The sulfur content of the export by NNPC stands at 0.26 per cent per wt and a 0.918 g/ml density at 15°C, according to Kpler, a data and analysis company.

The cargo was reportedly sold at an $8.50/t discount to the NWE 0.5 per cent benchmark on a Free on Board (FOB) basis.

https://guardian.ng/energy/nnpc-begins-export-from-ph-refinery-as-dubai-firm-buys-first-cargo/

udemzyudex:
Make I hear word with this dangote refinery monopoly, which kind yeye country be this?

We have refineries, after budgeting billions of naira to make it work why is it still not working?
Now they want us to forget it even exist and keep talking about dangote refinery like that's the only refinery the country have.

This monopoly nonsense talk shouldn't even be coming up in the first place if we have a working government.
Na wa ooo.

Deltafirstson:
At his campaign rally in Abeokuta, Ogun State capital, on January 25, 2023, Tinubu spoke on a number of issues, but those of fuel scarcity and naira redesign made the headlines.

However, Tinubu who spoke in Yoruba language, also assured the crowd that though people were saying petrol price would hit N200, it would be reviewed downward under him.

“The great Nigerian youths, the great Nigerian students, the confident Nigerian youths. This is a revolution. This election is a revolution. They are plotting, but they will fail. They said fuel price will increase and reach N200 per litre. Go and relax, we will bring it down,” he had said in the 7th minute of the video.

King Wasiu Ayinde Marshall, a Fuji musician who performed at the rally, interrupted the president’s speech with chants as the crowd cheered.

On the campaign podium with the president were Vice-President Kashim Shettima; Pa Bisi Akande, interim National Chairman of the APC; Femi Gbajabiamila, Chief of Staff to the President; Senator Gbenga Daniel; among other bigwigs of the ruling party.

Tinubu went further to say Nigerians would defy the acute fuel scarcity at the time and trek to cast their votes.

“The great Nigerian youths, the great Nigerian students, the confident Nigerian youths. This is a revolution. This election is a revolution. They are plotting, but they will fail. They said fuel price will increase and reach N200/N500 per litre. Go and relax, we will crash the prices,” he had said.

https://dailytrust.com/breaking-video-of-tinubu-campaigning-to-crash-fuel-

he had said in the 7th minute of the video.



https://www.youtube.com/watch?v=4JH8CC_JdUA

Buhari’ll reduce petrol to N40/L —David-West

FORMER Minister of Petroleum and Energy, Prof. Tamunoemi David-West, said that Nigerians should expect sharp drop in petrol price from the current N87 to about N40 per litre, saying, “the president-elect, Gen. Mohammed Buhari, will reduce the fuel pump price to N40 per litre.”

https://www.vanguardngr.com/2015/04/buharill-reduce-petrol-to-n40l-david-west/

Gotocourt:
Competitors wey no get shishi

Qtsnow:
https://thenationonlineng.net/market-economics-the-responsibility-of-nigerian-regulators-in-preventing-a-dangote-refinery-monopoly/

Qtsnow:
https://thenationonlineng.net/market-economics-the-responsibility-of-nigerian-regulators-in-preventing-a-dangote-refinery-monopoly/

bentenny:
One of the best options in breaking any monopoly is the reduction in the bureaucracy in obtaining a refinery license and getting crude oil!