The Dangote Petroleum Refinery has extended its free petroleum products delivery programme to Kano, Imo, Anambra and Nasarawa states, expanding an initiative designed to cut distribution expenses for independent petroleum marketers and potentially create room for lower petrol prices.
The latest expansion brings the number of locations covered by the arrangement beyond its initial beneficiaries in Lagos, Ogun, Rivers, Kaduna, Abuja and Delta states.
Under the initiative, the refinery bears the cost of delivering petroleum products to marketers and retailers, eliminating the expense of transporting products over long distances from the refinery to different parts of the country.
The arrangement is expected to ease one of the major cost pressures within the downstream petroleum distribution chain, particularly for marketers operating in areas located far from the refinery.
Transportation of petroleum products over long distances typically involves expenses covering haulage, vehicle operations, drivers, insurance, road risks and other logistics. Removing these costs, the refinery said, could improve the economics of supplying distant markets and give marketers greater room to compete on retail prices.
Fatima Aliko Dangote, Group Executive Director, Commercial Operations, Oil & Gas, WAEP and Fertiliser, Dangote Industries Limited, said the initiative was intended to ensure that the benefits of domestic refining were reflected throughout 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. Our goal is to make fuel distribution more efficient, reduce avoidable costs and support more competitive pump prices across Nigeria,” she said.
For independent marketers, the initiative could also address the financial strain created when money committed to purchasing petroleum products remains tied up while they wait for loading and transportation.
IPMAN National Publicity Secretary and Public Relations Officer, Chinedu Ukadike, said the arrangement could ease some of the difficulties faced by independent petroleum marketers and ultimately benefit consumers through lower prices.
“This gesture, if sustained, will be able to alleviate the sufferings of independent marketers. 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 stated.
Ukadike further explained that shortening the period during which marketers’ funds remain tied up would improve cash flow and enable businesses to deploy their capital more efficiently.
The distribution arrangement could also reduce some of the operational risks associated with moving large volumes of petroleum products across long distances by taking the products closer to their destination markets.
For consumers, the potential benefit lies in the possibility that lower distribution expenses could translate into more competitive prices at the retail end of the market.
The development comes as Nigeria’s downstream petroleum sector continues to adjust to increased domestic refining capacity and a more competitive market environment.
With a refining capacity of 700,000 barrels per day, the Dangote Petroleum Refinery has been supplying refined petroleum products to the domestic market while also expanding its presence in international markets.
The expansion of the free delivery programme to Kano, Imo, Anambra and Nasarawa therefore represents a broader effort to reduce distribution costs and improve the efficiency of petroleum products movement across Nigeria.
If sustained, the initiative could provide independent marketers with greater financial flexibility while creating additional room for cost savings to move through the supply chain to consumers.
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