IPMAN says Dangote free fuel delivery could cut petrol prices

The Independent Petroleum Marketers Association of Nigeria (IPMAN) has said Dangote Petroleum Refinery’s decision to extend free delivery of petroleum products to four additional states could reduce distribution costs for independent marketers and create room for lower petrol prices for consumers.

The association said the initiative, now extended to Kano, Imo, Anambra and Nasarawa, would ease the financial and logistical pressures faced by independent petroleum marketers, particularly those operating far from the refinery.

National Publicity Secretary and Public Relations Officer of IPMAN, Chinedu Ukadike, said transportation remains a major cost in the petroleum products distribution chain because marketers often commit significant funds to buying products before waiting for loading and long-distance transportation.

He said Dangote Refinery’s decision to absorb delivery costs would reduce the period marketers’ funds remain tied up, improve cash flow and allow them to deploy their capital more efficiently.

“This gesture, if sustained, will be able to alleviate the sufferings of independent marketers,” Ukadike said.

According to him, the arrangement also allows marketers to receive products closer to their markets without bearing the full cost of transporting them from the refinery.

“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 said.

The association said the reduction in logistics costs could eventually feed into lower retail petrol prices because transportation expenses form part of the cost structure that determines pump prices.

“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,” Ukadike said.

The free delivery initiative initially covered Lagos, Ogun, Rivers, Kaduna, Abuja and Delta, before being expanded to the four additional states.

IPMAN urged Dangote Refinery to extend the programme to more parts of the country, particularly additional northern states where transportation distances from the refinery are longer, and logistics costs can be higher.

The association described the initiative as a practical demonstration of the potential benefits of deregulation and increased competition in Nigeria’s downstream petroleum market.

“This is the beauty of deregulation and competition,” Ukadike said.

For independent marketers, lower transportation expenses could improve cash flow and operating margins while giving them greater flexibility to compete on retail prices.

Dangote Petroleum Refinery, with a stated refining capacity of 700,000 barrels per day, has become a major supplier of refined petroleum products to the Nigerian market as domestic refining capacity expands.

The growing competition among refiners and marketers is expected to place greater pressure on participants to improve pricing and distribution efficiency.

For consumers, the potential benefit of the free-delivery arrangement lies in whether the reduction in marketers’ logistics costs is ultimately passed through to pump prices.

IPMAN’s position is that sustained expansion of the initiative could lower distribution costs, improve product availability and create greater scope for cheaper petrol across more parts of Nigeria.