The Dangote Petroleum Refinery has introduced a minimum purchase requirement of 500,000 litres of petrol for oil marketers wishing to benefit from its free delivery scheme, sparking debates across Nigeria’s downstream petroleum sector.
The refinery confirmed the new condition this week, stating that only marketers who buy half a million litres or more qualify for no-cost transportation of products. At the refinery’s gantry price of N820 per litre, this translates to a minimum outlay of about N410 million, equivalent to at least 11 trucks of 45,000 litres each.
A senior refinery official, who asked not to be named, explained, “Yes, the Minimum Order Quantity for the free delivery is 500,000 litres.”
The requirement has raised concerns among independent petroleum marketers, who argue that the benchmark is too high for most operators to meet. The National Publicity Secretary of the Independent Petroleum Marketers Association of Nigeria, Chinedu Ukadike, confirmed that members were struggling with the threshold.
“Yes, it is true. We have to buy a minimum of 500,000 litres. That requirement has not been easy to follow,” he said. Ukadike explained that the association was compiling a list of members who could pool resources to meet the refinery’s benchmark.
According to him, without such collaboration, the free delivery scheme could be hijacked by middlemen, leading to profiteering and bureaucracy in the fuel supply chain.
“The current situation would bring back middlemen. We usually just buy one truck before, but now we have to buy 11 trucks. That is why we are encouraging members to group themselves to access products directly from Dangote,” Ukadike stressed.
Energy analyst Olatide Jeremiah, Chief Executive Officer of Petroleumprice.ng, criticised the requirement, describing it as unrealistic for the majority of retail station owners. “At ₦820 per litre, marketers must raise over ₦400m to qualify. How many operators can afford that? Many will have no choice but to rely on wholesalers,” Jeremiah said.
He argued that the policy could inadvertently strengthen middlemen, undermining the refinery’s goal of reducing costs and providing direct delivery to retailers. “The only way to eliminate middlemen is to allow marketers to load and pay per truck. Requiring 11 trucks per order risks keeping depot operators and wholesalers in business, which is exactly what Dangote wants to avoid,” he warned.
Earlier this month, the Dangote Refinery unveiled a free delivery initiative, backed by 1,000 compressed natural gas-powered trucks, aimed at cutting supply chain costs and ensuring cheaper pump prices for Nigerians.
The refinery, which boasts a capacity of 650,000 barrels per day, is Africa’s largest and began commercial operations last year. Its entry into the market has been hailed as a potential game-changer for Nigeria’s energy landscape, with expectations of improved domestic fuel supply and reduced dependence on imports.
Several major marketers, including Conoil Plc, Eterna Plc, Golden Super, Nepal Energies, Kifayat Global Energy, and Riquest & Gas, have already partnered with the refinery to benefit from the free logistics scheme.
However, the scheme has triggered strong opposition from tanker owners and fuel distributors. The President of the National Association of Road Transport Owners, Yusuf Othman, criticised the initiative, arguing that it undermines existing agreements between his members and fuel buyers.
“NARTO members own over 30,000 trucks, and we cannot do fuel distribution free of charge. Many of our members took bank facilities to buy trucks based on signed contracts. If Dangote delivers fuel directly for free, those agreements collapse,” Othman lamented.
He also cited provisions of the Petroleum Industry Act (PIA), arguing that the refinery’s direct free delivery violates regulatory guidelines.
Stakeholders now fear that instead of reducing costs, the new threshold could distort the market, leaving small operators sidelined while wholesalers reassert control.
Analysts warn that depot operators and middlemen, who typically thrive on bulk purchases, may continue to dominate distribution. Smaller filling station owners, lacking the resources to buy 11 trucks at once, may find themselves dependent on intermediaries once again.
Jeremiah reinforced this concern, noting that middlemen could easily resell products with additional margins, undermining the refinery’s effort to lower pump prices.
“If nothing changes, the refinery is only encouraging middleman activities, and depot operations will remain viable. That would defeat the original purpose of the free delivery programme,” he said.
While the Dangote Refinery’s initiative was designed to cut costs and reduce pump prices, the implementation has exposed structural weaknesses in Nigeria’s downstream sector.
IPMAN is pushing for collective purchasing to help smaller operators participate, while experts recommend revising the policy to allow per-truck loading. Industry watchers argue that without adjustments, the refinery risks alienating the very marketers it needs to ensure broad distribution nationwide.
For now, the free delivery programme remains under scrutiny, with stakeholders awaiting possible revisions. The debate highlights the delicate balance between economies of scale for the refinery and inclusivity for independent marketers in Nigeria’s evolving fuel supply chain.
punch.ng
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