LAGOS, NIGERIA — A seismic shift is rocking Nigeria’s downstream petroleum sector as bulk fuel buyers and filling station owners are increasingly bypassing traditional middlemen. They are now securing direct, logistics-free fuel supplies from the Dangote Petroleum Refinery, which is leveraging a new fleet of Compressed Natural Gas (CNG)-powered trucks for distribution.
This new distribution model, heralded by its supporters as a game-changer, is already causing a major rift with transport and marketing associations who accuse the refinery of monopolistic practices.
The direct supply program, which began in the Southwestern part of the country, is being met with enthusiasm by independent marketers eager to cut costs and stabilize pump prices. “Dangote has started the free delivery. Already, the trucks have started moving,” said Abubakar Shettima, President of the Independent Petroleum Marketers Association of Nigeria (IPMAN). “My members are very pleased with the development. I can confirm to you that my members have started receiving the trucks in Lagos, Ondo, Ogun, Ibadan, and others.”
Sources within IPMAN suggest this new model could lead to a drop in the retail pump price of fuel from as high as N865 to N841 per liter in some areas, as it eliminates the logistical expenses previously borne by marketers.
However, the new arrangement is not without its detractors. The National Association of Road Transport Owners (NARTO) has voiced strong opposition, with its president, Yusuf Othman, expressing concern that the free delivery service is causing buyers to abandon existing contracts with his members. He urged the federal government and the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) to intervene.
In a similar vein, the Depot and Petroleum Products Marketers Association of Nigeria (DAPPMAN) has been in a war of words with the Dangote Group, alleging the refinery is offering lower prices to foreign buyers and creating an unfair advantage. Dangote has countered these claims, accusing the marketers of seeking a massive annual subsidy to match the refinery’s prices at their depots.
Analysts say the refinery’s decision to bypass traditional supply chains is dismantling a complex ecosystem of intermediaries that thrived on Nigeria’s dependence on imported fuel. While it presents a significant challenge to the business models of depot operators and transporters, experts argue that this form of “vertical integration” could ultimately improve efficiency and lower prices for the end consumer.
The Dangote refinery, with a capacity of 650,000 barrels per day, can meet Nigeria’s entire domestic demand for Premium Motor Spirit (PMS) with a surplus for export. The company’s new logistics fleet, part of a ₦720 billion investment, aims to provide direct supply to over 42 million micro, small, and medium enterprises (MSMEs) by reducing energy costs.