By Emmanuel Olugua
Dangote Petroleum Refinery & Petrochemicals has expanded its free delivery of petroleum products to Kano, Imo, Anambra, and Nasarawa states, extending a logistics initiative aimed at cutting distribution costs and creating room for cheaper petrol at filling stations.
The expansion brings the number of states and territories covered by the initiative to 10, which already operates in Lagos, Ogun, Rivers, Kaduna, Delta, and the Federal Capital Territory.
Under the arrangement, the refinery absorbs the cost of transporting petroleum products to qualifying marketers, removing a major expense that ordinarily forms part of the final pump price paid by consumers.
The offer is open to marketers that meet the refinery’s minimum purchase requirement and is not restricted to selected companies, according to information published by petroleumprice.ng.
The initiative is expected to have a greater impact in states farther from the refinery, where marketers traditionally bear substantial costs for haulage, vehicle operations, insurance, and other logistics associated with moving petroleum products over long distances.
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 were transmitted beyond the refinery 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 refinery’s objective is to improve the efficiency of fuel distribution, eliminate avoidable costs, and encourage more competitive retail prices across the country.
“Our goal is to make fuel distribution more efficient, reduce avoidable costs, and support more competitive pump prices across Nigeria,” she added.
The Independent Petroleum Marketers Association of Nigeria (IPMAN) welcomed the expansion, saying it could ease some of the financial and logistical pressures faced by independent marketers.
IPMAN National Publicity Secretary and Public Relations Officer, Chinedu Ukadike, said one of the longstanding challenges confronting marketers was the length of time between paying for products and taking delivery.
Marketers, he explained, sometimes commit substantial amounts of capital to petroleum purchases only to wait for days or weeks before their products are loaded, leaving their funds tied down and affecting their ability to operate efficiently.
“This gesture, if sustained, will be able to alleviate the sufferings of independent marketers,” Ukadike said.
“There has been the issue of financial hold-up, whereby marketers pay for products and are not loaded for days and weeks, and they suffer unnecessary hardship bringing the product down.”
He said the free delivery arrangement could shorten the period for which marketers’ capital remains tied up, improve cash flow, and boost returns on investment.
“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 initiative to the possibility of more competitive pump prices, arguing that transportation expenses ultimately form part of the price paid by consumers.
“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.
Apart from cutting costs, direct delivery could reduce some of the operational risks associated with marketers independently transporting large quantities of petroleum products over long distances.
Ukadike urged the refinery to extend the programme to additional parts of the country, particularly more northern states, describing the initiative as an example of the potential benefits of competition and deregulation in the downstream petroleum industry.
“This is the beauty of deregulation and competition,” he said.
The expansion comes amid increasing competition in Nigeria’s downstream market as domestic refining capacity grows and marketers adjust to a market-driven pricing regime.
Dangote Refinery, which has a capacity of 700,000 barrels per day, supplies refined petroleum products to the Nigerian market while also exporting products to international markets.
Its free delivery programme takes the competition beyond refinery-gate pricing to logistics, one of the major components of downstream petroleum costs.
For marketers in distant markets such as Kano, eliminating haulage and related expenses could significantly alter the economics of taking products from the refinery. For consumers, the key test will be whether those savings ultimately translate into lower prices at the pump.
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