by Victoria Tokolo
…IPMAN hails initiative as refinery absorbs distribution costs, creates room for lower pump prices
Dangote Petroleum Refinery & Petrochemicals has expanded its free petroleum products delivery initiative to Kano, Imo, Anambra and Nasarawa States, in a move expected to reduce distribution costs for independent petroleum marketers and create room for lower petrol prices at the pump.
The initiative, which initially covered Lagos, Ogun, Rivers, Kaduna, Abuja and Delta States, is aimed at bringing petroleum products closer to marketers and retailers while eliminating the cost of transporting products over long distances from the refinery to various parts of the country.
By absorbing the delivery costs, the refinery is reducing one of the major expenses built into the downstream distribution chain.
Group Executive Director, Commercial Operations, Oil & Gas, WAEP and Fertiliser, Fatima Aliko Dangote, said the initiative was designed to ensure that the benefits of domestic refining translate into tangible savings for 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. Our goal is to make fuel distribution more efficient, reduce avoidable costs and support more competitive pump prices across Nigeria.”
The expansion has been welcomed by the Independent Petroleum Marketers Association of Nigeria (IPMAN), which said the initiative would reduce some of the financial and logistical pressures confronting independent marketers and potentially contribute to lower prices for consumers.
National Publicity Secretary and Public Relations Officer of IPMAN, Chinedu Ukadike, said the initiative addresses a longstanding challenge in the petroleum products distribution chain, where marketers commit substantial funds to product purchases and may then wait for extended periods before their orders are loaded and transported.
“This gesture, if sustained, will be able to alleviate the sufferings of independent marketers,” Ukadike said.
He explained that marketers often face financial constraints when their funds remain tied up while waiting for products to be loaded and transported to their destinations.
“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.
According to Ukadike, the delivery arrangement could also have a direct impact on pump prices because transportation costs are ultimately reflected in the price consumers pay.
“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 reduction in distribution costs is particularly significant for marketers serving locations far from the refinery. Under conventional distribution arrangements, transporting petroleum products over long distances involves additional expenses related to haulage, vehicle operations, driver costs, insurance, road risks and other logistics.
Removing or reducing these costs could improve the economics of supplying distant markets and give marketers greater room to compete on retail prices.
The initiative could also reduce some of the operational risks associated with moving large volumes of petroleum products over long distances. By taking products closer to their destination markets, the refinery is shortening the supply chain and potentially improving the reliability and efficiency of product distribution.
Ukadike commended the management of Dangote Refinery for the initiative and urged the company to extend the programme to more locations across the country, particularly in the northern states, to promote wider access to competitively priced petroleum products.
He described the development as a practical demonstration of the benefits of competition and deregulation in Nigeria’s downstream petroleum sector.
“This is the beauty of deregulation and competition,” he said.
The expansion comes as Nigeria’s downstream petroleum sector continues to adjust to growing domestic refining capacity and a more competitive market environment.
The Dangote Petroleum Refinery, with a stated capacity of 700,000 barrels per day, is supplying refined petroleum products to the domestic market while also expanding its presence in international markets.
The free delivery initiative adds another dimension to the refinery’s growing role in the downstream sector. Beyond increasing domestic supply, the refinery is taking steps to reduce the cost of moving petroleum products from the refinery to destination markets.
For motorists and households, the potential benefit is straightforward: lower transportation costs across the supply chain could give marketers greater room to reduce pump prices, provided the savings are passed on to consumers.
