Dangote Refinery’s N720bn Distribution Scheme to Save Nigerians Over N1.7tn Annually, Drive Down Fuel Prices
The Dangote Petroleum refinery says that its ambitious national fuel distribution initiative – valued at 720 billion Nairas – should allow Nigerians of 1.7 Billion de Nairas each year, mainly by reducing logistics costs, lowering pump prices and going inflationary pressure.
In a press release published on Sunday, June 30, the company revealed that it had started to deploy 4,000 compressed natural gas trucks (GNC) to provide oil products across Nigeria, absorbing more than 1.07 Billion de Nairas per year in distribution costs which would generally be passed on to consumers.
The company said that trucks will start direct delivery of petrol and diesel from August 15, targeting service stations, industrial facilities, telecommunications towers, aviation operators and other high volume users across the country. Trucks are part of a broader logistics overhaul which includes new GNC filling stations and credit support for marketing specialists.
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“This daring step will see the absorption of private refinery on 1.07 Billion de Nairas per year in fuel distribution costs,” the press release said. “The initiative is also ready to considerably benefit more than 42 million micro, small and medium -sized businesses (MPME) by reducing energy costs and improving profitability.”
Pump prices should drop
The refinery estimates that distribution costs alone on average N45 per liter, which has long been a burden for marketing specialists and end users, especially in the middle of the non-functionality of state pipelines of Nigeria.
By removing this cost thanks to direct deliveries fueled by the GNC, the Dangote initiative should help reduce pump prices, provide prices between states and reduce inflation in the fuel dependent sectors such as manufacturing, agriculture and transport.
The company has reiterated its objective to meet the daily demand of Nigeria of 65 million liters, made up of 45 million liters of petrol (PMS), 15 million liters of diesel and 5 million liters of aviation fuel.
Experts, presidency and marketing specialists applaud this decision
The presidency and the stakeholders of the industry praised the announcement as a transformer. Tosin Coker, Commercial Coordinator of the Compresic Presidential Natural Gas Initiative (PCNGI), described it as a pivotal approval of the vision of gas transport in Nigeria.
“The acquisition by Dangote Group of 4,000 GNC trucks is not only impressive, but also very strategic,” said Coker. “He points out to the market that the GNC is no longer a distant perspective but a current and practical solution with high energy costs, the emissions and challenges of the supply chain.”
The Independent Association of Oil Marketing Specialists in Nigeria (IPMAN) praised this decision as a long -awaited solution to gaps in old -fashioned infrastructure.
“Our pipelines have been non -functional for years. We had to count on expensive transportation of coastal deposits. Dangote’s intervention is launching a huge burden out of the shoulders of independent marketing specialists, “said ipman spokesperson Chinedu Ukadike.
Professor Eminent economist Ken IFE qualified the initiative of “rescue mechanism” for households and companies already weighed down by post-Subvention inflation. Bismarck Rewane, CEO of Financial Derivatives Company, said that the regime would limit ineffectures and “would remove the parasitic layer of intermediaries”, which extracts the value without investment.
“What Dangote has achieved two key objectives: delivery of products across the country at a uniform price by eliminating transitional costs and reducing logistics expenditure thanks to the distribution powered by the GNC,” said Rewane.
He added that the direct model on the station and the extension of credit facilities to marketing specialists would stimulate liquidity and have many points of sale in difficulty.
Economic, environmental and professional impacts
Beyond fuel economies, the Dangote group affirms that its initiative is aligned with the objectives of economic diversification and sustainability of Nigeria. The use of GNC trucks should reduce carbon emissions and promote cleaner transport alternatives, in accordance with Nigeria energy transition targets.
More than 15,000 direct jobs should be created through the logistics chain, including roles for truck drivers, GNC station operators, mechanics and support staff. It will also revive the dormant filling stations, will improve the delivery of the last mile and reduce the fuel shortage in difficult to access areas.
In addition, the regime aims to limit smuggling, which has increased since the elimination of fuel grants. With fuel sold at Unified, more equitable prices at the national level and transported through channels of the company followed, the risk of cross -border diversion should reduce considerably.
The Dangote group’s investment in the logistics infrastructure marks a significant pivot of the era of the costly third -party distribution, inadequate deposits and the failures of pipelines which have long tormented the oil sector downstream from Nigeria.
The company is not only to reshape fuel prices, but also to trigger what certain experts consider the first complete reform of the market in the post-Subvention era, by carrying the cost of fuel transport and by providing direct delivery services.
