The Dangote Petroleum Refinery and Petrochemicals has expanded its free petroleum products delivery initiative to Kano, Imo, Anambra and Nasarawa states, in a move aimed at reducing distribution costs for independent petroleum marketers and creating room for lower petrol prices.
The initiative, which initially covered Lagos, Ogun, Rivers, Kaduna, Abuja and Delta, is designed to take petroleum products closer to marketers and retailers while eliminating the cost of transporting products over long distances from the refinery.
By absorbing the logistics costs, the refinery is seeking to remove a major expense from the downstream distribution chain and allow savings to potentially translate into more competitive pump prices.
Group Executive Director, Commercial Operations, Oil & Gas, WAEP and Fertiliser, Fatima Aliko Dangote, said the initiative was intended to ensure that the benefits of domestic refining were reflected across the value chain.
“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 objective is to make fuel distribution more efficient, reduce avoidable costs and support more competitive pump prices across the country.
The development has received commendation from the Independent Petroleum Marketers Association of Nigeria (IPMAN), which said the initiative would ease some of the financial and logistical challenges confronting independent marketers.
IPMAN National Publicity Secretary and Public Relations Officer, Chinedu Ukadike, said the arrangement addressed a longstanding challenge in the distribution chain, where marketers often commit substantial funds to petroleum products but experience delays 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 the free delivery arrangement would reduce the period marketers’ funds remain tied up, improve cash flow and enable them 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 added.
Ukadike also said the initiative could contribute to lower pump prices, noting that transportation costs form part of the expenses ultimately passed on to 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.
The reduction in logistics expenses is expected to have greater significance for marketers supplying states located far from the refinery, as long-distance transportation typically involves haulage, vehicle operations, driver expenses, insurance, road risks and other associated costs.
Removing or reducing such expenses could improve the economics of supplying distant markets and provide greater room for competitive retail pricing.
The initiative could also reduce operational risks associated with transporting large volumes of petroleum products over long distances by shortening the supply chain and taking products closer to their destination markets.
Ukadike commended the management of the Dangote Refinery and called for the extension of the initiative to more parts of the country, particularly 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 industry continues to adjust to increased domestic refining capacity and a more 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 expanding its presence in international markets.
The free delivery programme adds another dimension to the refinery’s growing role in the downstream sector, as it seeks not only to increase domestic supply but also to reduce the cost of moving petroleum products from the refinery to different parts of the country.
For motorists and households, industry stakeholders say, lower distribution costs could provide greater room for marketers to reduce the prices consumers pay at the pump.
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