Written by Ella Michaels
The Dangote Refinery has launched a direct fuel distribution system across Nigeria, significantly lowering pump prices and sending shockwaves through the petroleum supply chain. With a ₦720 billion investment in 4,000 compressed natural gas (CNG)-powered trucks, the refinery is delivering fuel directly to filling stations and bulk buyers, eliminating middlemen and reducing costs.
As of September 15, petrol prices have dropped to ₦841 per litre in Lagos and other Southwestern states, and ₦851 in Abuja and some parts of the North. This price reduction is attributed to Dangote's "gantry price" of ₦820 per litre with free delivery, cutting out logistics costs and making fuel more affordable for consumers.
However, traditional players in the petroleum supply chain are expressing petroleum supply chain are expressing concerns about the impact of Dangote's direct distribution model on their businesses. The National Association of Road Transport Owners (NARTO) and the Natural Oil & Gas Suppliers Association of Nigeria (NOGASA) have warned that existing contracts could be undermined, and jobs could be lost if traditional distribution channels are sidelined.
In response to the concerns, the refinery has agreed to sell fuel in bulk to marketers and depot operators, rather than directly to end-users. Bulk buyers can now register on a Dangote portal, with deliveries handled by the new CNG-powered fleet.
Analysts say the arrangement promises lower petrol prices, reduced imports, and improved supply reliability. However, they also warn of potential risks, including loss of income for independent truckers, bottlenecks if Dangote's fleet is overstretched, and regulatory disputes over existing agreements.
Stakeholders have urged the federal government and the Nigerian Midstream & Downstream Petroleum Regulatory Authority (NMDPRA) to ensure fair competition and protect smaller players in the industry. As the Dangote Refinery continues to revolutionize fuel distribution in Nigeria, it remains to be seen how the industry will adapt to these changes.
