The Dangote Petroleum Refinery 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 refinery, in a statement on Sunday, said the initiative was designed to bring petroleum products closer to marketers and retailers while eliminating the high cost of transporting products over long distances from the refinery to various parts of the country.
The initiative initially covered Lagos, Ogun, Rivers, Kaduna, Abuja and Delta states.
By absorbing delivery costs, the refinery said it was removing a major expense from the downstream petroleum distribution chain and improving the efficiency of product supply across the country.
Group Executive Director, Commercial Operations, Oil & Gas, WAEP and Fertiliser, Dangote Industries Limited, Fatima Aliko Dangote, said the initiative was intended to ensure that the benefits of domestic refining were reflected in savings for businesses and consumers.
“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.
“Our goal is to make fuel distribution more efficient, reduce avoidable costs and support more competitive pump prices across Nigeria.”
The expansion has been welcomed by the Independent Petroleum Marketers Association of Nigeria, which said the initiative would ease some of the financial and logistical challenges facing independent marketers and potentially contribute to lower prices for consumers.
IPMAN National Publicity Secretary and Public Relations Officer, Chinedu Ukadike, said the initiative addressed a longstanding challenge in the petroleum distribution chain, where marketers often commit substantial funds to purchasing 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. 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,” Ukadike said.
He added that the delivery arrangement would reduce the period marketers’ funds remained tied up, improve cash flow and enable businesses to deploy their capital more efficiently.
The refinery said the reduction in distribution costs would be particularly beneficial to marketers supplying areas located far from the facility, where long-distance transportation attracts additional expenses, including haulage, vehicle operations, drivers’ costs, insurance and road-related risks.
Removing or reducing these expenses, it said, could improve the economics of supplying distant markets and give marketers greater flexibility to compete on retail prices.
The initiative is also expected to reduce operational risks associated with transporting large volumes of petroleum products over long distances by taking products closer to their destination markets.
The expansion comes as Nigeria’s downstream petroleum sector continues to adjust to increased domestic refining capacity and a more competitive market environment.
The Dangote refinery, with a capacity of 700,000 barrels per day, has been supplying refined petroleum products to the domestic market while expanding its presence in international markets.
