In a move set to reshape Nigeria’s fuel distribution landscape, Dangote Petroleum Refinery has entered into a landmark agreement with the Independent Petroleum Marketers Association of Nigeria (IPMAN).
The deal, expected to commence in the coming weeks, will see Dangote’s refinery supply a staggering 60 million litres of Premium Motor Spirit (PMS) commonly known as petrol every week. This translates to a substantial 240 million litres of petrol monthly, marking a significant step forward for the country’s fuel supply chain.
For IPMAN, the deal is more than just an agreement; it is a major leap toward streamlining fuel distribution across Nigeria. Traditionally, independent marketers have relied heavily on middlemen to import and distribute petrol. This new arrangement allows IPMAN members to source petrol directly from Dangote’s refinery, eliminating previous logistical bottlenecks and ensuring a more efficient and cost-effective fuel supply.
The National Publicity Secretary for IPMAN, Chinedu Ukadike, explained how the deal would enhance the association’s operational capacity. “Before now, most of the imported products in Nigeria were distributed through IPMAN. With this agreement, we can off-take millions of liters directly from Dangote Refinery without any intermediaries,” Ukadike added.
He also emphasized that the supply will be flexible and scalable, depending on demand, with Dangote offering more than 60 million litres weekly as needed.
The new deal comes at a critical time for Nigeria’s fuel sector, which has long been plagued by high dependency on imported petroleum products. Dangote Refinery, pushed as the largest in the country, is expected to significantly reduce this reliance, saving Nigeria billions of dollars spent on fuel imports each year.
Ukadike is optimistic about the positive changes that the agreement will bring, highlighting that the distribution process will begin as soon as the final documentation is completed, with operations expected to begin before the end of November.
A crucial aspect of this deal is the establishment of a Special Purpose Vehicle (SPV) by IPMAN to oversee the product off-taking process. This mechanism will ensure that funds are guaranteed for transactions and that the distribution process is smooth and efficient. It replaces the previous system where individual marketers struggled with purchasing small quantities of fuel, often causing delays and inefficiencies.
This collaboration is also timely given the increasing competition in Nigeria’s fuel market, particularly after the deregulation of the sector. Petrol prices have been steadily declining in recent weeks, fueled by a surge in imports from both the Nigerian National Petroleum Corporation (NNPC) and independent marketers.
With Dangote Refinery now directly supplying petrol to IPMAN, the Nigerian fuel sector is on the verge of a significant transformation, one that promises to stabilize supply and reduce fuel costs for consumers nationwide.
As the final stages of the deal unfold, it’s clear that this partnership represents a new era for Nigeria’s energy sector. By cutting out middlemen and improving supply chains, Dangote Refinery and IPMAN are set to deliver a more reliable and affordable fuel distribution system for the country. For Nigerians, this could mean lower prices and a more sustainable energy future.
