HomeBusinessDangote vs. Pinnacle: The Monopoly of Fuel Supply Causes Debate

Dangote vs. Pinnacle: The Monopoly of Fuel Supply Causes Debate

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KEY POINTS


  • The government took action after Dangote Refinery, one of Nigeria’s largest companies, allegedly tried to corner the market in fuel sales.
  • May make monthly production targets and deadlines for its refineries unrealistic critics says of NNPCL.
  • Some stakeholders have urged regulators to maintain a good mixture of competitiveness to prevent the destruction of market variety.

A new controversy between Dangote Group and Pinnacle Oil & Gas shows another potential struggle for Nigeria’s fuel business.

Dangote refinery insists it has the ability to put an end to fuel importation but critics have opined that the company’s prospect is potentially exploitative of market dominance to stamp out competition and affect consumers.

Downside of expectations in refinery

Latterly through its press release, Dangote Group remained positive about the actualisation of the Kaduna, Warri as well as the Port Harcourt refineries before the end of the year as declared by the GCEO of NNPCL; Mele Kyari. But industry analysts and stakeholders continue to have doubt.

“This achievement will among other things eliminate any myths about monopoly and place Nigeria as the hub of the refining of the product in Africa.”

Opponents, however, recall numerous postponements and failed promises on the refinery rehabilitation and refer to Kyari’s words as mere empty words.

Starting from the year 2023, different times that the Port Harcourt refinery agreed to make its production has passed without meeting the said time, hence keeping doubts on the authenticity of the time line.

Allegations of monopoly

It escalated recently when Pinnacle Oil & Gas accused Dangote of holding a Monopoly in the Nigerian fuel market. Although the company management dismisses the allegations, others opine that such a market force might cause distortion of competition in Nigeria.

“With what Dangote Refinery is doing right now, it poses a lot of threats to other firms, expansion and existence,” one analyst complained.

“That is why it can be said that there are no enterprises which, knowing that their market shares are being threatened, will not fight this process.”

Brand warfare lessons

Comparing it to prior brand feuds, analysts say that achieving monopoly hasty causes magnification of conflict.

“Constructing the largest single-train refinery in the world has its own risks looming when it shakes transpiring status quo,” a market analyst pointed out.

As Dangote Refinery plans to produce 650000 barrels of crude oil per day, one new factor to consider is competition especially with Pinnacle Oil & Gas and other players in the market.

The relevance of balanced competitions.

The main members of this industry feel that there is need to support a competitive and an accountable market to ensure that the market is not monopolized much as this may lead to high costs of fuel.

For now, competition still leaves the Nigerian refinery scene rather warlike, with Dangote and all its rivals facing plenty of economic- and operation-based hurdles.

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