Dangote Refinery: Tank farm owners oppose direct sale to marketers

By AYOOLA OLAOLUWA

Depot and tank farm owners under the aegis of Jetty and Tank Farm Owners Association of Nigeria (JEPTON) and Depot and Petroleum Products Marketers Association (DAPMA) have expressed concerns about the negative impacts of plans by Dangote Refinery to allow fuel marketers load 2,900 tankers daily at its loading gantries on their businesses, Business Hallmark can report.

In separate interviews with BH over the weekend, they faulted Dangote Refinery’s decision to engage in the retail end of petroleum products marketing with the construction of loading gantries with the capacity to load almost 3,000 fuel tankers a day.

According to the jetty and tank farm owners, the plan to sell fuel directly to retailers, if allowed to stand, will deepen their economic woes.

The Group Executive Director, Strategy, Portfolio Development and Capital Projects,  Dangote Group, Devakumar Edwin, it would be recalled, had disclosed at several fora that the refinery had constructed marine and gantry facilities from where the 60 million PMS, 20m litres of kerosene, as well as diesel, LPG and other products refined by the 650,000 barrels per day  integrated refinery can be dispatched.

According to him, each facility – marine and loading gantries (truck loading bays) on their own can evacuate 75 per cent of the refinery’s refined products.

“We have facilities to evacuate through roads, we have large loading capacity (103 loading terminals) and we can evacuate 75 per cent of our production through road.

“We can also evacuate 75 per cent of our production through the sea in the event that we want to export”, Devakumar had said back in February.

BH reliably gathered that while the refinery’s management plans to supply refined products by shuttle boats to far away coastal cities like Port Harcourt, Calabar and Warri for consumers in the South South, South East regions and some parts of the North, fuel meant for Lagos, South West, Northwest and North Central states would go in trucks loaded at the refinery’s state of the art loading gantries.

The facility, our correspondent learnt, has the capacity to load  2,900 road-going trucks on a daily basis.

Anticipating the bottlenecks that may result from moving refined petroleum products through the roads, Dangote Group, in collaboration with the Lagos State government, has commenced work on the expansion of the Lekki-Epe Expressway into a dual carriageway of four lanes.

BH findings also revealed that the Lagos State government has flagged off construction of a coastal road that will reroute all petrol tankers going to states outside Lagos to Sagamu in Ogun State via Epe, before proceeding on their journeys.

Meanwhile, jittery jetty, depot and tank farm owners are kicking against the planned pumping of fuel into trucks to be transported on road by Dangote Refinery, arguing that it will be detrimental to their business.

Some of the tank farm owners who spoke to our correspondent on the condition of anonymity at the weekend, maintained that allowing Dangote Refinery to allow trucks to load products at its facility is tantamount to giving the firm a backdoor licence to do retail fuel marketing.

“Though it was not stated anywhere that Dangote will participate in retail fuel sales, the implication of allowing 2,900 trucks to load daily at its loading bay confirmed the unannounced approval that must have been given to it (Dangote) to be a tank farm operator.

“It is a well known secret that tank farm owners don’t own trucks. We only import fuel in large quantities or get supplies from the Nigerian National Petroleum Company Limited (NNPCL), which we then sell to filing stations.

“Some of our members have multiple storage tanks than can accommodate 4 million litres. This means that just one tank can supply 121 (one hundred and twenty one) 33,000-litre trucks.

“We have invested billions of dollars in building jetties, pipelines and storage tanks to hold petroleum products over time.

“Without doubt, Dangote venturing into fuel retail business will crowd us out, leading to huge debts and loss of investments”, a tank farm owner in Ijegun, who did not want his identity disclosed told BH.

A JEPTON member, who also spoke on the matter, while imploring the Federal Government and regulatory authorities to stop Dangote Refinery from selling directly to owners of filling stations, said the refinery’s entry into the fuel retail arena poses questions about market fairness.

“Though I didn’t see anywhere, where it was explicitly stated that Dangote Refinery had been granted approval to sell products to small buyers (retailers), we know the implication of allowing it load up to 2,900 trucks daily from its facility. That is 95.7 million litres daily.

“We are only allowed to add our own margin of about N10 on a litre, which comes down to N330,000 on a 33,000 litre truck.

“With an extra margin of N330,000 on a truck,  why will any petrol station owner come to me if he can get the product at a much cheaper rate? Except Dangote will not be selling to small buyers at the same amount it will be selling to us”, the troubled farm owner asked rhetorically.

However, the Independent Petroleum Marketers Association of Nigeria (IPMAN), while welcoming Dangote Refinery’s plan to load directly into trucks, faulted the tank farm owners claim of only adding N10 margin on each litre they get from NNPCL.

IPMAN’s Deputy Zonal Secretary, South West Zone, Idris Tajudeen, while speaking on the development, decried the arbitrary price PMS is sold by private depot owners despite getting their stocks from the NNPCL, saying the move will checkmate the excesses of depot owners.

Tajudeen accused farm tank owners of getting petrol at the approved price of N555/litre from the Nigerian National Petroleum Company (NNPC) Limited, the sole importer of the commodity, but sell to its members at a much rate of between N585 to N590.

“That is why you see filling stations owned by independent marketers sell fuel for between N600 and N650 in Lagos and its environs, as they must also add their own margins to make profit.

On why their own price is much higher than that of major marketers, who sell slightly above the NNPCL rate, he said major marketers get their fuel directly from NNPC as they have the funds and storage facilities to store what they get from the corporation.

“Our own case is quite different. Though we (independent marketers)  also have the opportunity of buying petrol at the approved price from NNPCL depots, the minimum purchase and the financial outlay is preventing us from doing so.

“Unfortunately, we do not have enough funds to buy or even store what we are required to buy from NNPCL. Hence, the resort to private depot owners, who sell as little as 16,500 litres.

“It is a good development, a positive one for IPMAN members. I hope they won’t put pressure on Dangote to drop the initiative”, he said.

Meanwhile, experts have argued that several factors, such as dilapidated roads and congested ports will make the new refinery to rely more on vessels and pipelines to get its products to consumers.

“We have not seen anything to suggest that our roads are ready for the huge task. Even with 1,000 trucks, the whole Lekki-Ajah axis is practically going to shut down.

“You can see what is happening on the Oshodi-Apapa Expressway. Trucks going into our ports are not up to 500, yet  commuting along that axis is a nightmare. You can then imagine unleashing almost 3,000 trucks on the Lekki/Ajah/Epe Expressway.

“Maybe later when necessary infrastructure and facilities are put in place. But for now, the idea won’t fly, except we want to have another Apapa debacle on our hands”, declared Dr. Bode Teniola, an expert in transportation and urban planning.