By Peace Udugba -The Daily Torch Media
Dangote Petroleum Refinery & Petrochemicals has expanded its free petroleum product 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 initiative, which initially covered Lagos, Ogun, Rivers, Kaduna, Abuja and Delta, is designed to bring petroleum products closer to marketers and retailers while eliminating the cost of transporting products over long distances from the refinery.
By absorbing delivery costs, the refinery is seeking to reduce a major expense in Nigeria’s downstream petroleum distribution chain.
Group Executive Director, Commercial Operations, Oil & Gas, WAEP and Fertiliser at Dangote Industries Limited, Fatima Aliko Dangote, said the initiative was intended 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,” she said, adding that absorbing delivery costs would reduce distribution burdens and create room for savings to flow through the value chain to consumers.
The initiative has been welcomed by the Independent Petroleum Marketers Association of Nigeria (IPMAN), which said the arrangement would ease some of the financial and logistical pressures facing independent marketers.
IPMAN National Publicity Secretary and Public Relations Officer, Chinedu Ukadike, said the initiative addresses longstanding challenges in the distribution chain, particularly delays between payment for petroleum products and their eventual loading and transportation.
“This gesture, if sustained, will be able to alleviate the sufferings of independent marketers,” Ukadike said.
According to him, the delivery arrangement would reduce the period marketers’ funds remain tied up, improve cash flow and allow businesses to deploy their capital more efficiently.
He added that lower transportation costs could also contribute to reduced pump prices, noting that logistics expenses are ultimately reflected in the price paid by consumers.
The reduction in distribution costs is expected to be particularly significant for marketers operating in areas far from the refinery. Under conventional distribution arrangements, long-distance transportation involves haulage, vehicle operations, driver expenses, insurance, road risks and other logistics costs.
Removing or reducing such expenses 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 bringing products closer to their destination markets.
Ukadike commended the Dangote Refinery management for the initiative and urged the company to extend the programme to more locations, particularly in northern Nigeria.
He described the development as a practical demonstration of the benefits of competition and deregulation in the downstream petroleum sector.
The expansion comes as Nigeria’s downstream oil industry continues to adjust to increased domestic refining capacity and a more competitive market environment.
The Dangote Petroleum Refinery, with a stated 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 impact on the downstream sector by seeking not only to increase domestic supply but also to reduce the cost of moving petroleum products from the refinery to various markets.
For motorists and households, lower distribution costs could create greater opportunities for petroleum marketers to reduce pump prices, depending on prevailing market conditions and other components of fuel pricing.
