The Dangote Petroleum Refinery has entered into a significant partnership with the Independent Petroleum Marketers Association of Nigeria (IPMAN) to supply 60 million litres of Premium Motor Spirit (PMS), commonly known as petrol, weekly. This agreement, which equates to 240 million litres monthly, aims to streamline petrol distribution in Nigeria.
The $20 billion Lekki-based refinery is also seeking billions of dollars in funding to facilitate crude oil imports and increase production. The refinery began producing petrol in September 2024 and is now expanding its output to meet the needs of IPMAN members and other stakeholders.
IPMAN National Publicity Secretary, Chinedu Ukadike, revealed that independent marketers could lift as much fuel as allocated, with plans to finalize the direct supply arrangements by the end of November. He noted that the deal eliminates intermediaries, allowing IPMAN to distribute products efficiently nationwide while protecting members from financial losses due to unreliable dealers.
The partnership has already impacted fuel prices, with reductions of N10 to N15 per litre in various parts of the country. This is attributed to increased competition in the deregulated downstream sector. Ukadike expressed optimism that petrol prices would decrease further by year-end as independent marketers begin lifting directly from the Dangote refinery.
Meanwhile, despite efforts to prioritize local production, the Nigerian National Petroleum Company Limited (NNPCL) and other marketers imported over 2 billion litres of PMS in 42 days. The deregulated sector has intensified competition, with major marketers continuing to import refined products to supplement local production.
Challenges in Crude Supply and Financial Strategies
The refinery, which has the capacity to process 650,000 barrels per day, is seeking additional crude supplies to meet production targets. Dangote Group is engaging commercial lenders, development banks, and other industry participants to raise the estimated $2 billion needed every 90 days to secure crude oil.
Despite the refinery’s potential, concerns have been raised about its profitability due to the naira’s devaluation and over-budget construction costs. Stakeholders have also questioned NNPCL’s ability to meet the refinery’s crude requirements, given its existing forward contracts.
Call for Payment of N10 Billion Equalisation Fund
Independent marketers have appealed to the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) to release the N10 billion Petroleum Equalisation Fund owed to them. This fund, managed by the now-defunct Petroleum Equalisation Fund Management Board, was intended to compensate marketers for losses incurred from selling petrol at uniform prices nationwide.
IPMAN emphasized the need for prompt payment to ease financial pressures on marketers, particularly those facing loan obligations. The NMDPRA has yet to fulfill its promise to settle the outstanding amount.
Future Outlook
The Dangote refinery’s collaboration with IPMAN marks a critical step toward improving Nigeria’s petroleum distribution network and stabilizing fuel prices. As the refinery seeks to scale production and secure crude supplies, the agreement with IPMAN and ongoing deregulation efforts are expected to enhance competition and efficiency in the downstream sector.
