By ebosele@hotmail.com –
Dangote Petroleum Refinery & Petrochemicals has expanded its free petroleum product delivery initiative to Kano, Imo, Anambra and Nasarawa States, in a move expected to reduce distribution costs for independent petroleum marketers and create room for lower petrol prices at the pump.
City Business News reports that the initiative, which initially covered Lagos, Ogun, Rivers, Kaduna, Abuja and Delta States, is aimed at bringing 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 a major expense in the downstream distribution chain and allowing marketers to deploy their capital more efficiently.
Group Executive Director, Commercial Operations, Oil & Gas, WAEP and Fertiliser, Fatima Aliko Dangote, said the initiative was designed to ensure that the benefits of domestic refining translate into tangible 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.
Dangote added that the objective was to make fuel distribution more efficient, reduce avoidable costs and support more competitive pump prices across Nigeria.
The initiative has received commendation from the Independent Petroleum Marketers Association of Nigeria (IPMAN), which said it would ease some of the financial and logistical pressures confronting independent marketers.
National Publicity Secretary and Public Relations Officer of IPMAN, Chinedu Ukadike, said the arrangement addresses a longstanding challenge in the distribution chain, where marketers commit substantial funds to purchasing products but may wait for days or weeks before their orders are loaded and transported.
“This gesture, if sustained, will be able to alleviate the sufferings of independent marketers,” Ukadike said, adding that the initiative would reduce the period marketers’ funds remain tied up, improve cash flow and enable businesses to deploy their capital more effectively.
“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,” he added.
According to Ukadike, lower transportation costs could also translate directly into reduced petrol prices, as logistics expenses form part of the cost ultimately borne by consumers.
“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 reduction in distribution costs is particularly significant for marketers operating in areas far from the refinery. Under conventional arrangements, long-distance transportation attracts additional expenses, including haulage, vehicle operations, driver costs, insurance, road risks and other logistics.
Removing or reducing such costs could improve the economics of supplying distant markets and provide greater room for competitive retail pricing.
The initiative could also reduce operational risks associated with transporting large volumes of petroleum products over long distances. By moving products closer to destination markets, the refinery is helping to shorten the supply chain and improve the efficiency and reliability of distribution.
Ukadike commended Dangote Refinery for the initiative and urged the company to extend the programme to more locations, particularly in the northern states, to promote wider access to competitively priced petroleum products.
He described the development as a practical demonstration of the benefits of deregulation and competition in Nigeria’s downstream petroleum sector.
“This is the beauty of deregulation and competition,” he said.
The expansion comes as Nigeria’s downstream petroleum sector continues to adjust to increasing domestic refining capacity and a more competitive market environment.
The Dangote Petroleum Refinery, with a capacity of 700,000 barrels per day, has increasingly supplied refined petroleum products to the domestic market while expanding its presence in international markets.
The free delivery initiative adds another dimension to the refinery’s growing impact on the downstream sector by seeking not only to increase domestic supply but also to reduce the cost of moving products from the refinery to consumers.
For motorists and households, the potential benefit is clear: reducing the cost of transporting petrol through the supply chain could give marketers greater room to lower pump prices and make fuel more affordable.
