•Dangote Refinery loading bay
Dangote Petroleum Refinery & Petrochemicals has expanded its free petroleum product delivery initiative to Kano, Imo, Anambra and Nasarawa states, bringing the number of states covered by the programme to 14 and raising expectations of lower distribution costs and more competitive petrol prices across the country.
The initiative, which initially covered Lagos, Ogun, Rivers, Kaduna, Abuja and Delta, is designed to bring refined petroleum products closer to independent petroleum marketers and retailers while eliminating the cost of transporting products over long distances from the refinery, reports Daily Independent.
By absorbing the logistics cost, the refinery is removing a major expense in Nigeria’s downstream petroleum distribution chain, potentially creating additional room for marketers to reduce pump prices.
The development is also being welcomed by independent petroleum marketers, who say the initiative could ease some of the financial and operational pressures that have historically affected product distribution and cash flow.
Group Executive Director, Commercial Operations, Oil & Gas, WAEP and Fertiliser, Fatima Aliko Dangote, said the objective was to ensure that the benefits of domestic refining extended beyond the refinery gate to businesses and consumers.
“The value of domestic refining must ultimately be felt beyond the refinery gate. By absorbing the cost of delivering petroleum products to our customers, we are removing a significant component of the distribution burden and creating room for those savings to flow through the value chain to consumers,” she said.
According to her, the initiative is aimed at making fuel distribution more efficient, reducing avoidable costs and supporting more competitive pump prices across Nigeria.
The Independent Petroleum Marketers Association of Nigeria (IPMAN) has applauded the initiative, describing it as a major relief for independent marketers who often commit substantial funds to petroleum products and face delays in getting their orders transported to their destinations.
National Publicity Secretary and Public Relations Officer of IPMAN, Chinedu Ukadike, said the initiative addresses a longstanding challenge in the downstream sector, particularly the financial burden created when marketers pay for products but wait for days or weeks before they are loaded and transported.
“This gesture, if sustained, will be able to alleviate the sufferings of independent marketers,” Ukadike said.
He explained that the conventional distribution system could leave marketers’ capital tied up for extended periods, affecting their ability to replenish stock and efficiently operate their businesses.
According to him, Dangote Refinery’s delivery arrangement could significantly improve marketers’ cash flow by ensuring that products get closer to their businesses without the additional burden of arranging and financing long-distance transportation.
“This time around, Dangote has made it very, very easy for marketers. Marketers are jubilating, and you will see the return on investment as an independent marketer. Your money will not be tied down,” he said.
Ukadike also linked the reduction in logistics costs to the possibility of lower petrol prices for consumers, arguing that transportation expenses are ultimately incorporated into the retail price of petroleum products.
“You also have less risk, and you have petroleum products at your doorstep. Other consumers will also see that our pump price will not continue to go up. The more Dangote brings down its pump price, the more independent marketers will bring down theirs,” he said.
The significance of the initiative is particularly pronounced in markets located far from the refinery. Under conventional distribution arrangements, marketers supplying distant locations incur costs relating to haulage, truck operations, drivers, insurance, road risks and other logistics.
Those expenses are eventually reflected in the cost of products delivered to filling stations and, ultimately, in the prices paid by motorists and households.
By taking products closer to their destination markets, Dangote Refinery is effectively shortening the downstream supply chain and reducing some of the costs associated with moving large volumes of petroleum products across the country.
The arrangement could also help reduce operational risks associated with long-distance transportation while improving the reliability and efficiency of product supply.
IPMAN urged Dangote Refinery to extend the programme to additional locations, particularly in the northern part of the country, arguing that wider coverage would deepen the benefits of domestic refining and competition in the downstream market.
