By Adewale Sanyaolu
The fierce price war between the two dominant players in the downstream sector– Dangote Petroleum Refinery and NNPC Retail Limited, has driven petrol prices down, but the situation may have taken a troubling turn, with some industry players now resorting to unethical practices to stay in business.
The development has also resulted in significant losses for many investors, particularly small to medium-sized fuel retail outlets, signaling that they may soon be pushed out by the industry’s larger players.
Some transporters who spoke to Daily Sun in separate interviews said the price war has left commercial bus operators at the receiving end as most fuel dispensing machines were now fraudulently adjusted.
A commercial tricycle operator who identified himself as Hakeem Oriade, said most filling stations, especially those operated by independents, have adjusted their pumps in a bid to maximize profit.
“At the moment, if I buy 10 litres of fuel, what I am getting in value is about eight litres”, he lamented.
Another operator at the popular Oja Oba market motor park in Abule Egba, Mr. Adesina Odutade, corroborated the claims of Oriade, saying most tricycle operators are currently running at a loss.
He said most independents are now engaged in sharp practices as part of strategies to compete and woo customers.
He explained that the price drop by Dangote partners, which included, MRS, Heyden, Ardova Petroleum from N920 per litre to N890 and NNPC to N880 may have forced many independents to devise means of remaining afloat in business.
The result of such unwholesome business practices have forced many of them to begin to cut corners by adjusting their pumps to remain afloat.
A petroleum product marketer at one of the leading marketing firms in Apapa, who pleaded anonymity due to the sensitive nature of the matter, said most filling stations are guilty of sharp practices,especially adjustment of pumps.
He explained that at the current retail pump price of N890 and N990 per litre, most independent marketers cannot compete with the majors.
He added that the number of Dangote partners and NNPC filling stations selling at controlled prices were insufficient to serve the large petrol retail market.
He explained further that independent marketers control more than 70 per cent of the downstream retail market, saying this accounts for the reason why under-dispensing would be on the rise.
“As a marketer, I can tell you for free that no independent can sell petrol at N890 per litre and break even. That price cannot take care of their overhead cost, talk less of paying salaries among other expenses,”.
For his part, Executive Director, Center for the Promotion of Consumer Rights, Mr.Jude Opara, said the failure of the regulator has given rise to uncontrolled sharp practices in the downstream sector.
He lamented that in all of these, the consumers are the ones at the receiving end as they are currently not getting value for their money.
Opera, however, called on the Nigerian Midstream Downstream Petroleum Regulatory Authority(NMDPRA) to step up campaigns against sharp industry practices.
He said gone are the days when the mention of the regulator sent shivers down the spines of operators. He alleged that regulatory oversight in the downstream industry has been watered down due to a number of factors.
Daily Sun, last week, reported the escalating price war which is currently unsettling the downstream fuel market as stiff competition among retailers through petrol price cut unsettles the market.
The disruption, which started with a price reduction announcement by the Dangote Petroleum Refinery penultimate week from N920 per litre to N890 among its partners, which included; MRS, Heyden, AP(Ardova Petroleum), Optima Energy, Hyde and Techo Oil has seen other marketers dropping prices.
In Lagos last week, NNPC retail outlets further dropped its price from N910 per litre to N880 in Lagos and N935 in Abuja.
At the NNPC filling station at Apple Junction, Lagos, the product was sold for N880 per litre.
However, the price remained at N910 per litre at the NNPC retail outlets on Charity road, Abule, College road in Ogba and on Acme road also in Ogba.
The situation has created stiff competition among retail outlets as they battle to retain customers with the most affordable price.
The refinery equally announced a reduction in the gantry price of petrol, from N865 to N835.
The reduction in gantry price marks the second price reduction within a week.
The refinery assured that high-quality Dangote petrol will now be available at the following prices across all our partner retail outlets
Dangote disclosed that its key partners, including MRS, AP (Ardova), Heyden, Optima Energy, Hyde and Techno Oil, will offer petrol at N890 per litre, down from N920 in Lagos.
While in the South-West, the price will be N900 per litre, reduced from N930. In the North-West and North-Central, the price will be N910 per litre, lowered from N940.
In the South-East, South-South, and North-East, the price will be N920 per litre, down from N950.
According to Dangote, these price reductions reaffirm its commitment to providing high-quality petrol at affordable rates, benefiting consumers across the nation.
“In addition, we are working collaboratively with our partners to ensure equitable reflection of this price reduction.
Dangote Petroleum Refinery has consistently worked to reduce the prices of petrol and other refined petroleum products, ensuring the continued benefit of Nigerian consumers. For example, in February, the refinery reduced prices twice by N125.
In addition, products such as diesel and Liquefied Petroleum Gas (LPG) have also experienced significant price reductions due to the refinery’s sustained efforts’”
The refinery said it anticipates that this latest reduction in PMS prices will generate a positive ripple effect throughout various sectors of the economy, providing much-needed relief to consumers and contributing to broader economic growth, particularly during the Easter season.
“Dangote Petroleum Refinery remains steadfast in its commitment to ensuring a steady supply of premium-quality petroleum products, with sufficient reserves to meet domestic demand, along with a surplus for export.
This strategy is designed to support the stability of the domestic market while also contributing to the growth of Nigeria’s foreign exchange reserves.
Furthermore, Dangote Petroleum Refinery calls on industry stakeholders, including marketers and distributors, to continue sourcing their products from the refinery, ensuring that the benefits of these price reductions are fully realised across the country.”
Dangote, in its bid to ensure it gets a grip on the market had last month sealed a pact with three fuel retail outlets, MRS, Heyden, and AP, to sell petrol at its various filling stations in Lagos, other South-West states, the North, the South-South, and the South-East at prices ranging between N860 and N895 per litre.
The agreement aims to offer Nigerians more affordable fuel by reducing the price of Premium Motor Spirit (PMS) at the pumps aims to reduce the price of petrol at pump, potentially providing relief for consumers who have been facing high fuel costs.
This deal is expected to have a significant impact on the Nigerian oil and gas market, particularly in terms of price stability and fuel scarcity.
But, despite the assurance by the Federal Government last week that the Naira-for-crude would not discontinued, feelers from the fuel market suggest otherwise as MRS, Heyden and AP have jerked up petrol prices from N860 and 895 per litre earlier agreed with Dangote to N920 and N940 per litre respectively, an indication that the earlier deal has collapsed.