The Petroleum Products Retail Outlets Owners Association of Nigeria has committed to promoting healthy competition and controlling price fluctuations in the downstream sector.
Following consultations with key stakeholders, including the Major Energy Marketers Association of Nigeria, Depot and Petroleum Products Marketers Association of Nigeria, Nigeria Union of Petroleum and Natural Gas Workers and PETROAN emphasised the need to prevent monopoly and ensure local refineries thrive.
Recognising the economic benefits of local refining and the challenges posed by market instability, PETROAN, in a statement, urged regulatory authorities to establish mechanisms that encourage price stability for at least six months.
The association believes that such would reduce investment risks, foster economic growth and ultimately protect the interests of consumers and Nigerians at large.
“To achieve this, PETROAN advocates a multiplicity of supply sources, including Dangote Refinery, NNPC refineries, modular refineries and imports. This diverse range of sources will foster competition, especially with imports, allowing for comparisons with international market prices and protecting the local market from exploitation,” it stated.
The association commended the Nigerian Midstream and Downstream Petroleum Regulatory Authority and the Federal Competition and Consumer Protection Commission for their efforts in promoting healthy competition.
However, it also urged the regulatory bodies to remain vigilant and prevent unfair competition.
PETROAN highlighted the need to encourage all local refineries, as it will benefit the economy through increased domestic production of petroleum products, reduced reliance on imports, creation of jobs, stimulation of economic growth, improved energy security and reduced vulnerability to international market fluctuations.
The association stressed that the sudden downward review of prices has resulted in massive losses, with those affected counting losses in billions of naira. This situation poses a significant fear of further divestment in the sector, as investors are wary of unpredictable market conditions.
“Moreover, the threat of price fluctuations is affecting the businesses in the sector, which will lead to retrenchment. This will have far-reaching consequences, including job losses and economic instability.
“To address these challenges, PETROAN proposed that regulatory authorities establish mechanisms to encourage price stability for at least six months. This approach will help reduce the uncertainty and risk associated with investments in the sector, ultimately promoting economic development and protecting the interests of consumers and Nigerians,” it added.
Fluctuating petrol prices threatening our businesses, oil marketers lament
Oil marketers have cried out about the negative impacts of unstable prices of Premium Motor Spirit or petrol in the country on their businesses.
President of the Petroleum Products Retail Outlets Owners Association of Nigeria, Billy Gilly-Harris, raised the concern during a live television programme on Tuesday.
According to him, fluctuating petrol prices in the last few weeks constitute potential threats to the survival of businesses of its members.
Gilly-Harris’ concern comes on the heels of ongoing price war between the Dangote Refinery and the Nigerian National Petroleum Company Limited.
Following the announcement of a price cut by the Dangote Refinery by N65 at the ex-depot price, the retail price at filling stations affiliated with Dangote dropped from N925-N930 to N860.
No sooner after, the NNPCL also reduced its price at its retail stations, further deepening rivalry between the two dominant players.
Billy-Harris said “In our consistently weekly reviews, we discovered that the size of loss, and the possibility of most of us getting out of business is glaring at us in the face. Because in today’s Nigeria, we have collaborative efforts being made between all the stakeholders, and we reach out to one another to know how the businesses are doing.
“As much as we are making efforts to make sure that Nigerians have product affordability from our end as the last mile in the industry, we also want to stay afloat and liquid.
“The challenge we have is that we buy products at a price today, and before the close of business, the price has reduced. We thought there should be a mechanism by which prices are analysed and ensure it doesn’t impact negatively on the industry.
“I have always said that every business can only survive by making some minimal profits that are commensurate with the price of paying the cost of doing business.
“We are fully aware that the international prices of crude oil and other related expenses are also being reduced. But when we invest to buy products at say N880, we are not going to sell at that price. And if such products become reduced to N840, N850, N860 or even N870 per litre, it becomes challenging how we will be able to recover our costs.”
Commenting on price monopoly in the downstream sector, Gilly-Harris said its members can either import products or buy from local refineries; however, it would not sell products at the expense of the survival of PETROAN members’ businesses.
He said “Yes, we have been in the forefront of always implementing what stakeholders agree. We have the capacity to import our products. We also have the capacity to buy locally refined products. But we see that prices consistently shift up or down, and there is no clear business consultation on how this should be done. That is why we said the NMDPRA and the consumer protection agency should swing into action and be able to work together with other stakeholders so that we can be able to have a stable market and a stable price.”
