The Natural Oil and Gas Suppliers Association of Nigeria (NOGASA) has raised alarm over Dangote Petroleum Refinery’s decision to bypass existing distribution channels and supply refined petroleum products directly to end-users. The association cautions that this move risks causing nationwide fuel supply disruptions, long-term scarcity, and the collapse of established distribution networks.
During NOGASA’s Annual General Meeting in Abuja on Thursday, the association’s National President, Bennett Korie, called on Dangote Refinery to halt its direct distribution plans and engage in further dialogue with key stakeholders. He urged the refinery to learn from the failed attempts by Nigerian National Petroleum Company Limited (NNPC) to handle refining and retail simultaneously.
Korie appealed to President Bola Tinubu to intervene, emphasizing that the scale of Nigeria’s fuel market is too vast for a single company to manage sustainably. “Dangote alone cannot shoulder the entire nationwide distribution,” he said.
Conflicting Perspectives on Distribution Strategy
In response, a Dangote Group official dismissed the opposition as anti-Nigeria, arguing that the refinery’s plan aims to eliminate logistics costs and reduce fuel prices by delivering products more efficiently across the country. The official expressed surprise that fuel marketers would resist a strategy designed to make petrol more affordable.
Meanwhile, the National President of the Petroleum Products Retail Outlet Owners Association of Nigeria, Billy Gillis-Harry, supported NOGASA’s concerns. He warned Nigerians against prematurely celebrating the refinery’s announcement, cautioning that monopolizing refining, storage, logistics, and distribution could lead to market imbalances and price control.
Fuel Prices Surge Amidst Market Uncertainty
Fuel prices at depots jumped by as much as 7%, climbing from ₦815 per litre on Wednesday to ₦870 per litre on Thursday. This price increase has fueled anxiety among independent marketers, who fear losing market share.
The Dangote refinery recently unveiled plans to deploy 4,000 new Compressed Natural Gas (CNG)-powered tankers to distribute petrol and diesel directly to large consumers including marketers, manufacturers, telecom companies, and airlines bypassing traditional depots and intermediaries. The initiative, slated to launch on August 15, is projected to save Nigerians over ₦1.7 trillion annually by cutting logistics costs and improving energy efficiency.
Risks of Centralizing Distribution
Korie warned that merging refining, distribution, and retail under one entity is unsustainable, referencing the decline of NNPC’s refineries following similar efforts. “When NNPC started direct retailing through their filling stations, that’s when the refineries began to falter,” he explained.
He stressed the importance of maintaining a balanced ecosystem where Dangote focuses on refining and selling to marketers, who then handle distribution. This approach, he argued, would stabilize supply chains and protect jobs across over 50,000 filling stations nationwide.
Industry Call for Government Mediation
NOGASA expressed readiness to collaborate with Dangote to ensure the refinery’s success without jeopardizing the livelihoods of independent suppliers. They urged government intervention to facilitate dialogue between Dangote Group, petroleum marketers, and other industry stakeholders to safeguard jobs and market stability.
Gillis-Harry echoed these concerns, highlighting the potential for market domination. He pointed to parallels in the cement industry, where concentrated control of supply chains led to soaring prices and the collapse of small distributors.
He also warned that retail outlet operators are currently losing up to ₦80 per litre due to price fluctuations, threatening the sector’s sustainability.
Dangote Group’s Response
Speaking confidentially, a Dangote Group official dismissed fears of market disruption, questioning why anyone would oppose a move designed to reduce fuel costs. “We are not charging extra for delivery. We’re removing logistics costs that make petrol expensive. Why the resistance if not anti-Nigeria?” the official said.
He emphasized that the Nigerian fuel market is large enough to accommodate all players, and the company’s direct distribution plan aims to make fuel more accessible and affordable to Nigerians.
