The Dangote Petroleum Refinery says it has expanded its free petroleum products delivery initiative to Kano, Imo, Anambra and Nasarawa states, a move it says is expected to reduce distribution costs for independent petroleum marketers and create room for lower petrol prices.
According to a statement on Sunday, the initiative, which initially covered Lagos, Ogun, Rivers, Kaduna, Abuja and Delta states, is designed to bring petroleum products closer to marketers and retailers while eliminating the cost of transporting products over long distances from the refinery to different parts of the country.
By absorbing delivery costs, the refinery is reducing one of the major expenses embedded in the downstream petroleum products distribution chain.
Group Executive Director, Commercial Operations, Oil & Gas, WAEP and Fertiliser, Dangote Industries Limited, Fatima Aliko Dangote, said the initiative was aimed at ensuring that the benefits of domestic refining translated into 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. Our goal is to make fuel distribution more efficient, reduce avoidable costs and support more competitive pump prices across Nigeria.”
The expansion was reportedly welcomed by the Independent Petroleum Marketers Association of Nigeria, which said the initiative would reduce some of the financial and logistical pressures confronting independent petroleum marketers and contribute to lower prices for consumers.
National Publicity Secretary and Public Relations Officer of IPMAN, Chinedu Ukadike, was quoted as saying that the initiative addressed a longstanding challenge in the petroleum products distribution chain, where marketers commit substantial funds to product purchases and may then wait for extended periods 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,” he stated.
According to him, the refinery’s delivery arrangement reduces the period for which marketers’ funds remain tied up, improves cash flow and allows businesses to deploy their capital more efficiently.
Dangote said the reduction in distribution costs is particularly significant for marketers supplying areas far from the refinery, as the transportation of petroleum products over long distances attracts additional expenses associated with haulage, vehicle operations, driver costs, insurance, road risks and other logistics.
It was stated that removing or reducing such costs could improve the economics of supplying distant markets and provide marketers with greater room to compete on retail prices.
The initiative also reduces the operational risks associated with moving 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 also expanding its presence in international markets.
