Dangote Petroleum Refinery & Petrochemicals has expanded its free petroleum product delivery initiative to Kano, Imo, Anambra and Nasarawa States as part of efforts to reduce distribution costs and create room for lower petrol prices at filling stations.
The expansion takes the initiative beyond Lagos, Ogun, Rivers, Kaduna, Abuja and Delta, where deliveries had already commenced, widening the refinery’s attempt to bring petroleum products closer to marketers and retailers without requiring them to bear long-distance transportation costs.
Under the arrangement, Dangote Refinery absorbs the cost of delivering products to customers, removing a significant expense from the downstream distribution chain.
Transportation costs, particularly for marketers operating far from the refinery, ordinarily include haulage, vehicle operations, driver expenses, insurance and risks associated with moving petroleum products over long distances.
The refinery said removing those costs should improve the economics of fuel distribution and give marketers greater scope to offer 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 felt by businesses and consumers beyond the refinery itself.
“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 petroleum product distribution more efficient while eliminating avoidable costs.
“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 confronting independent marketers.
IPMAN National Publicity Secretary and Public Relations Officer, Chinedu Ukadike, said the arrangement could address the problem of marketers committing substantial capital to petroleum product purchases and then waiting for extended periods before products are loaded and transported.
“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 having products delivered closer to marketers would reduce the length of time their funds remained tied up and improve their ability to deploy capital to other areas of their businesses.
“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,” Ukadike said.
He also linked the reduction in logistics costs to the potential for lower retail prices, noting that transportation expenses are ultimately reflected in what motorists pay at filling stations.
“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 impact could be particularly significant in states located farther from the refinery, where the cost of transporting petroleum products over hundreds of kilometres adds to marketers’ operating expenses.
Beyond the financial implications, the initiative could reduce some of the risks associated with transporting large volumes of petroleum products over long distances.
By taking products closer to their destination markets, Dangote Refinery said it was shortening the supply chain while seeking to improve the reliability and efficiency of distribution.
Ukadike urged the refinery to extend the programme to additional locations, particularly across northern Nigeria, to enable more independent marketers to benefit from reduced distribution expenses.
“This is the beauty of deregulation and competition,” he said.
The initiative comes as Nigeria’s downstream petroleum industry adjusts to increased domestic refining capacity and competition following years of heavy dependence on imported refined products.
Dangote Petroleum Refinery, which has a processing capacity of 700,000 barrels per day, has been increasing supplies to the Nigerian market while expanding exports of refined petroleum products.
The free delivery programme takes the refinery’s intervention further down the petroleum value chain, moving beyond production and supply to address one of the costs between the refinery gate and the filling station.
For consumers, however, the ultimate test will be whether the savings recorded by marketers from free delivery translate into lower prices at the pump.
Follow us on:
