Dangote and NUPENG, PETROAN and IPMAN
Dangote’s market entry into the oil and gas industry has disrupted many market dynamics not only in Nigeria but even on global stage. On the import side, Dangote has diverted over 30m liters of petroleum products daily from the global market—and off course from the importers—activating big market threats to both the producers and importers. Such market disruption comes with stiff resistance from the affected parties.
This disruption cuts across the entire oil and gas value chain. From hijacking the market of 650,000 barrels of crude per day to hijacking the market of tens of millions liters of petroleum products per day and to now diverting the logistics market in a more competitive manner.
4,000 CNG-powered trucks rolled out into the oil and gas logistics market will definitely take many existing players out of the market. This is even on ideal market conditions—without considering the mode and manner Dangote is planning to enter the market.
He has the refinery, he has the trucks and he will do door delivery—covering the entire value chain—making it cheaper and safer for marketers to deal with him than doing every aspect of the market independently. Additionally, Dangote’s trucks will be powered by CNG, at a cost almost 2 times lower than the conventional diesel oil used by marketers.
In terms of capacity, Dangote is coming in with far more fleet capacity than any company in the market on individual basis. As at 2020, NBS had it that Nigerian Oil and Gas Logistics Market has a cumulative fleet capacity of 30,000 trucks, 23,000+ for PMS distribution, 5,700+ for AGO distribution and just about 300 for other petroleum products. But despite that, no company has upto 2,000 trucks individually. NNPCL has the highest with little above 1,000 trucks. Dangote coming in with 4,000 trucks—CNG-powered—makes him the biggest and perhaps the deciding player in the value chain.
No matter how much the unions will push, Dangote will win this battle for his capacity advantage and control of the entire value chain. There are so many ways to solve problems but threats can not solve this particular one because the threatened has undue advantage over the one making the threats. It’s either to dialogue with Dangote or gather money to build their own refinery and do what they want with it.
From the side of average Nigerians, all we need is cheaper and consistent supply of petroleum products irrespective of who does it. All the unions have been in existence for so long without making life easier to the Nigerian people. If this arrival of Dangote will make life easier so be it. We will deal with the monopoly issue later.
I really register the concerns of the unions but there’s practically nothing anybody can do about this. After all it’s a private business.