By Adewale Sanyaolu
In response to the mounting pressures of fluctuating petrol prices, Nigerian fuel marketers are forging strategic alliances to minimise losses, safeguard business sustainability and maintain steady product distribution across the country.
In the last three to four months, the major players in the petroleum downstream value chain, Dangote Refinery and NNPC Retail Limited, have been in a major battle to gain the largest share of the fuel market through frequent price slashes, both at the gantry and at the pumps.
While the Dangote Refinery has gone into partnerships with some major retail outlets, which include Ardova Petroleum, MRS, Heyden, Optima Energy, Techno Oil, and Hyde, to sell at cheaper prices compared to what is obtainable at other retail outlets, NNPC Retail Limited, in response to the price slashes by Dangote, has equally responded with further price cuts. At the moment, most Dangote Refinery partners are selling petrol at N875 per litre, while NNPC Retail Limited outlets are selling at N870 per litre.
The development seems to be in favour of the consumers, who now have multiple choices of retail outlets to purchase from at a price fit for their pockets.
However, this price war and frequent changes in petrol price remain a major disincentive for fuel marketers, especially those operated by independent marketers, who have continued to get their fingers burnt through mounting losses due to these changes.
Speaking to Daily Sun on the implications of the frequent changes in the retail pump price of petrol, Publicity Secretary of the Independent Petroleum Marketers Association of Nigeria (IPMAN), Mr. Chinedu Ukadike, said while the price fluctuations represent the beauty of the liberalization of the petroleum downstream sector, they also come with their own challenges.
He said that for marketers to continue to remain in business, a new collaborative channel has been opened whereby three marketers of petroleum products pull resources together to purchase a truckload of about 45,000 litres, as against the usual practice of a single marketer purchasing the whole truck.
The strategy, according to him, is designed to reduce losses because it takes fewer days to dispense off 15,000 litres as against 45,000 litres.
“We are doing this to tame losses so that by the time Dangote or NNPC decide to change their petrol prices, our members would have finished selling the 15,000-litre volume purchased.
This is the era where you buy what you can quickly sell and make do with the little margin before returning to make fresh orders. If you decide to buy in larger quantity now, I can assure you that the marketer would run into massive loss, because before you finish selling that volume, the bigger players might have slashed prices.”
Ukadike called on the Federal Government to prevent a monopoly market in the petroleum downstream sector by ensuring that all four state-owned refineries are operating at optimal capacity.
He argued that a situation whereby the fate of the country is left in the hands of a single monopoly would create more problems for the country.