As the August 15 launch date approaches, Nigeria’s fuel market is set for a transformative shift with the Dangote Petroleum Refinery preparing to directly supply petrol to marketers across the country.
This new distribution model, which eliminates traditional intermediaries, promises to stabilize fuel prices and enhance operational efficiency in an industry grappling with rising costs and fuel scarcity.
Industry sources have confirmed that both major and independent marketers are in active discussions with Dangote Refinery to secure direct access to refined petrol.
The initiative aims to address ongoing fuel shortages, volatile forex-driven import costs, and rising production expenses.
Marketers are eager to leverage this opportunity to secure reliable and cost-effective fuel supplies, thereby ensuring competitive pricing in the domestic market.
Abubakar Shettima, President of the Independent Petroleum Marketers Association of Nigeria (IPMAN), highlighted the potential for significant market benefits, stating that most of the association’s members have already registered with the refinery in anticipation of the direct supply rollout.
“We are optimistic about the impact of this development. The absence of logistics and petrol costs could lead to price reductions, which will be a positive outcome for the Nigerian economy,” Shettima told BusinessDay.
With over 30,000 members and more than 150,000 service stations nationwide, IPMAN is positioning itself to play a central role in the new supply chain model, which will benefit both large and small marketers across the country.
Data from Dangote Refinery shows that its distribution network already includes several prominent firms, such as MRS, Heyden, Ardova, Techno Oil, and TotalEnergies, among others. As the list of registered marketers continues to grow, the refinery’s direct supply initiative is gaining momentum.
In addition to marketers, large-scale industrial users and logistics-intensive businesses are also eyeing the benefits of Dangote Refinery’s new strategy.
Manufacturers, in particular, have expressed keen interest in securing direct supply agreements to ensure access to affordable and reliable fuel, which is essential for their operations, especially in the face of deregulation and fluctuating import prices.
A senior official from the Manufacturers’ Association of Nigeria (MAN) shared their optimism, stating, “Access to reliable and affordable fuel is crucial for manufacturers, particularly in light of the deregulated market and the price shocks caused by fuel imports. We are watching the August 15 launch closely and have initiated steps to engage with the refinery.”
The Dangote Refinery, Africa’s largest, with a production capacity of 650,000 barrels per day, is preparing to roll out its direct distribution model.
The plan involves a fleet of 4,000 compressed natural gas (CNG)-powered trucks that will deliver petrol directly to petrol stations, industrial firms, and other large consumers.
This approach cuts out traditional depot owners, streamlining the supply chain and eliminating additional costs typically incurred in the transportation of fuel.
The new strategy also promises significant cost-saving advantages, including free delivery and flexible credit terms for bulk purchases. By incorporating logistics into the refinery’s internal supply chain, Dangote Refinery aims to reduce the risk of business disruptions caused by unionized truck drivers and tanker drivers’ strikes. Moreover, the model enhances safety protocols for transporting petroleum products.
Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise (CPPE), said the positive impact of the new model, particularly for consumers outside Lagos who have long faced premium prices due to additional transportation costs.
“This new approach is set to improve regional access and pricing, making fuel more affordable for consumers across Nigeria,” Yusuf said.
While the new supply chain model is expected to benefit marketers, rural filling stations, and large industrial users, it poses a challenge to traditional depot owners, import-dependent marketers, and truckers who have long acted as intermediaries in Nigeria’s petroleum distribution network.
With the August 15 launch date fast approaching, Nigeria’s fuel market is bracing for significant changes. Dangote Refinery’s move to directly supply petrol is seen as a game-changer, poised to reshape the fuel distribution landscape, reduce costs, and enhance Nigeria’s energy security.