Dangote Refinery expands free fuel delivery to Kano, Imo, Anambra, Nasarawa, others

…Marketers applaud initiative as refinery absorbs logistics costs to lower distribution expenses and ease consumer burden

Dangote Petroleum Refinery and Petrochemicals has expanded its free petroleum products delivery initiative to Kano, Imo, Anambra and Nasarawa states, as well as several other locations, in a move expected to reduce distribution costs for independent petroleum marketers and create room for lower petrol prices.

The initiative, which initially covered Lagos, Ogun, Rivers, Kaduna, the Federal Capital Territory and Delta states, is designed to bring 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 delivery costs, the refinery is seeking to reduce one of the major expenses embedded in the downstream distribution chain and enable marketers to pass the savings on to consumers.

Group Executive Director, Commercial Operations, Oil and Gas, WAEP and Fertiliser, Fatima Aliko Dangote, said the initiative was designed to ensure that the benefits of domestic refining translated 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,” she said.

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 petrol prices.

National Publicity Secretary and Public Relations Officer of IPMAN, Chinedu Ukadike, said the initiative addressed a longstanding challenge in the distribution of petroleum products, where marketers often commit substantial funds to product purchases and 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 said marketers had often faced what he described as financial hold-ups, whereby funds committed to petroleum products remained tied up for days or weeks because of delays in loading and transportation.

“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.

According to Ukadike, the refinery’s delivery arrangement could reduce the period during which marketers’ funds remain tied up, improve cash flow and enable businesses to deploy their capital more efficiently.

“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 added that the initiative could also affect pump prices because transportation costs form part of the overall cost 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 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 attracts additional expenses, including haulage, vehicle operations, drivers’ costs, insurance, road risks and other logistics.

Removing or reducing such costs could improve the economics of supplying distant markets and provide marketers with greater room to compete on retail prices.

The initiative could also reduce operational risks associated with transporting large volumes of petroleum products over long distances by shortening the supply chain and bringing products closer to destination markets.

Ukadike commended the management of the Dangote Refinery for the initiative and urged the company to extend the programme to more locations across the country, particularly in the northern states.

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 the growing capacity of domestic refineries and an increasingly competitive market environment.

The Dangote Petroleum Refinery, with a stated capacity of 700,000 barrels per day, has increasingly supplied refined petroleum products to the domestic market while also expanding into 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 different parts of the country.

For motorists and households, the potential benefit is that lower distribution costs could provide marketers with greater room to reduce pump prices, depending on prevailing product prices and other operating costs.