By Francis Ajuonuma
Dangote Petroleum Refinery and Petrochemicals has expanded its free petroleum products delivery initiative to Kano, Imo, Anambra and Nasarawa states, with independent petroleum marketers saying the move could reduce distribution costs and create room for lower petrol prices.
The initiative, which initially covered Lagos, Ogun, Rivers, Kaduna, Abuja and Delta, involves the refinery absorbing the cost of delivering petroleum products to marketers.
The arrangement is intended to reduce one of the major expenses incurred in moving fuel from the refinery to markets across the country.
The expansion is particularly significant for marketers operating far from the refinery, where transportation costs, vehicle operations, driver expenses, insurance and road-related risks add to the cost of distributing petroleum products.
Group Executive Director, Commercial Operations, Oil & Gas, WAEP and Fertiliser, Fatima Aliko Dangote, said the initiative was aimed at ensuring that savings from domestic refining extended beyond the refinery to other parts of the downstream value chain.
“The value of domestic refining must ultimately be felt beyond the refinery gate,” Dangote said.
She said absorbing delivery costs would reduce the distribution burden and create room for savings to be passed through the value chain to consumers.
The Independent Petroleum Marketers Association of Nigeria (IPMAN) welcomed the expansion, saying it could address some of the financial and logistical challenges confronting independent marketers.
IPMAN National Publicity Secretary, Chinedu Ukadike, said marketers often commit substantial funds to purchasing petroleum products but face delays in loading and transporting their orders.
“This gesture, if sustained, will be able to alleviate the sufferings of independent marketers,” Ukadike said.
He said the new arrangement would help reduce the period marketers’ funds remained tied up in transportation and improve their cash flow.
“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 said the reduction in transportation costs could also affect pump prices, depending on how much of the savings marketers pass on to consumers.
“You also have less risk, and you have petroleum products at your doorstep,” he said.
He urged Dangote Refinery to extend the initiative to more locations, particularly in the northern states, where longer distances can increase the cost of product distribution.
“This is the beauty of deregulation and competition,” Ukadike said.
The development comes as Nigeria’s downstream petroleum sector adjusts to increased domestic refining capacity and a more competitive market environment.
