There are mixed expectations as the Dangote Petroleum Refinery & Petrochemicals kicks off with its fuel distribution logistics programme.

The refinery had announced an investment of over N720 billion to implement its initiative of deploying 4,000 Compressed Natural Gas (CNG)-powered trucks for the nationwide distribution of petroleum products, which is expected to save Nigerians over N1.7 trillion annually.

The step, it said, will see the privately-owned refinery absorb over N1.07 trillion annually in fuel distribution costs.

The initiative is also poised to significantly benefit over 42 million Micro, Small, and Medium Enterprises (MSMEs) by reducing energy costs and enhancing profitability.

The initiative, which eliminates transportation costs for fuel marketers and large-scale consumers, is expected to help reduce pump prices and inflation.

From today, Dangote will begin the direct delivery of petrol and diesel to filling stations, industrial facilities, and other high-volume consumers.

According to a statement from the refinery, it aims to meet Nigeria’s daily consumption of 65 million litres of refined petroleum products. This includes 45 million litres of Premium Motor Spirit (PMS), 15 million litres of diesel, and 5 million litres of aviation fuel.

With the average logistics cost estimated at N45 per liter, the refinery will incur over N1.07 Trillion annually in free distribution expenses, according to a statement earlier.

“This strategic programme forms part of Dangote’s broader commitment to eliminating logistics bottlenecks, enhancing energy efficiency, promoting environmental sustainability, and supporting Nigeria’s economic development. The company noted that lower fuel distribution costs will help reduce production costs, ease inflationary pressures, and stimulate economic growth,” the refinery had said.

However, the initiative had drawn opposition from some segments of the petroleum sector especially those in the business of fuel supply and logistics who feared Dangote getting involved with fuel distribution may drive them out of business.

Dangote may use MRS licence

As the programme kicks off today, there are indications that the refinery may use the distribution licence of MRS for the scheme.

Currently, MRS, one of the major marketers, has a distribution license and since the commencement of operation by Dangote Refinery in 2024, the firm has been one of the partner stations for distribution of products from the refinery.

A source who spoke with our correspondent yesterday explained that there is nothing untoward in the arrangement.

“Don’t forget MRS has been an integral part of the refinery,” the source said.

Marketers express mixed feelings

The National President of Petroleum Products Retail Outlet Owners Association of Nigeria (PETROAN), Billy Gillis-Harry in a chat with our correspondent yesterday said while PETROAN is interested in the success of Dangote Refinery, one giant cannot make a forest.

He said, “For us in PETROAN, we are ambivalent. We wish Dangote the best and we want him to succeed and we want the refinery to be successful. However, one giant cannot make a forest and we are looking at a Nigeria that would impact to the most far away land – the creeks, the hamlets where they have one station that can be able to serve their needs and then create an ecosystem.

“It is a proven fact that whenever a retail outlet is built in a location, it suddenly changes the economic environment. Those who used to use wood to cook will now stop and use gas, kerosene.

“We are there to expand its processes into the hinterlands, the Islands and the faraway places but if he believes he can do that for Nigeria, we wish him the best and we are waiting to see how his process would impact the economy of this country. I believe that he (Dangote) loves Nigeria so much. What he should be looking at is what all of us collectively will do to boost the economic value of Nigeria.”

Another fuel marketer who spoke with our correspondent on the condition of anonymity said the marketers are waiting to see how the fuel distribution would play out.

“We are also waiting to see the terms and conditions. If I was going to buy from him and I am a major marketer, I will focus on taking trucks to the far North. Until we see the terms and conditions, we can decide on what to do,” the marketer said.

Another marketer said life may be tough for those in the business of distribution but added, “It appears Nigerians are happy with the development.”

When contacted yesterday, spokesperson of Dangote, Mr. Tony Chiejina said all plans have been concluded to kick off the scheme. The refinery last week took delivery of some of the trucks ahead of the programme commencement.

What experts are saying

Speaking with Daily Trust, Prof. Dayo Ayoade mni, Energy Law expert at the University of Lagos, said the distribution while it is a good business plan for Dangote to bypass encumbrances preventing the purchase of his products by marketers does portend well for the country in the long run.

He stated that the move would stifle competition as marketers would no longer invest in the sector and this would ultimately put Nigeria’s energy security in the hands of Dangote alone.

He said, “It is a good thing for Dangote because he has sidestepped those who he felt were trying to hinder the distribution of his own particular products because maybe they grant preference to NNPCL or other marketers, but now his own products go straight to the market through his own network.

“So, from the point of view of Dangote Refinery, the impact is huge on the company. The company will be getting money directly into his own pockets. But this has larger implications on the sector that I think has not been realised by many stakeholders. By being a dominant producer and now directly reaching the consumer, it means that it could potentially disrupt or ruin the businesses of a lot of the marketers that all they do is to pick up products and move it around. So, the transportation network is gone.

“The other thing is the lack of competition because what Dangote has done means that ultimately, his dominant power will continue to reverberate throughout the downstream sector. And I think that there are competitive and trust concerns of where one dominant player holds the entire market in his hands. There are also concerns about energy security because we have to rely on different players to have a secure downstream sector. Otherwise, if anything happens to Dangote Refinery and we are all totally dependent on that refinery, then we are all in trouble.”

Energy expert and CEO of Cabtree Limited, Labde Sowunmi described the move as a welcome development for Nigerian customers because it will drive the competition to another level.

He stated that for every competitive area the major beneficiary is the Nigerian state because competition drives price to what is practical and allows people to come up with innovation for them to survive.

He however said there are a number of things that need to be kept in perspective as there is no how the existing structure for midstream and downstream will respond to it and there is also the regulatory part.

“When I say regulatory part, Dangote’s license as of today is for midstream operations in the refinery. I am not sure he has a license for downstream operations which includes distribution of the truck system and if that’s not the case he will need to approach the regulator for that kind of licence. From the last that I heard from sources within the regulator I don’t think he has done that but those are just what you call technicalities. I’m sure they’ll find a way around it.”

He added that the market will react and at the end of the day, prices will be better for Nigerians.

On concerns of Nigeria’s energy security, he said there’s no wisdom or practical purposes for energy to be from one source and the US proved that as far back as 1911 when they came up with the antitrust laws from the dissolution of Standard Oil.

“So yes that doesn’t help and for perspective if one person were to own the supply chain what will happen is that the day people get that person angry, he can just lock up the whole place, switch off his phone and go to the Bahamas. But having said that, people from FCCPC and a number of others will be called upon to do the needful so that they will ensure that everybody’s playing within the law.”

For the marketers, he said the government and the law will protect them but they must also know that they need to also look into their future for them to be more practical in terms of their ability to compete.

“The law and the regulations will not protect them forever. So those are things for them to also look at in terms of competition. But I’m sure the government will not allow just one person to take over the whole system. It doesn’t even help anybody.”

On his part, Wumi Iledare, Professor Emeritus of Petroleum Economics & Director, Emmanuel Egbogah Foundation said the commencement of domestic petroleum product distribution by the Dangote Refinery would transform Nigeria’s downstream market by reducing import dependence, enhancing supply stability, and testing regulatory frameworks under the Petroleum Industry Act (PIA) 2021.

“This shift offers macroeconomic benefits such as foreign exchange savings and inflation moderation, while also presenting sectoral challenges and risks that require vigilant oversight and infrastructure improvements. Import marketers may lose market share to domestic offtakers, and the Nigerian National Petroleum Corporation Limited (NNPCL) faces strategic choices regarding crude supply partnerships. Regional trade could benefit from exports to West and Central Africa.

“However, risks include crude feedstock reliability, regulatory overreach, market concentration, and infrastructure bottlenecks. Priority actions include operationalizing transparent supply arrangements, enforcing PIA provisions, de-bottlenecking logistics, overseeing competition, and ensuring data transparency through public dashboards.

Key metrics to monitor include refinery output, pricing dispersion, import volumes, scarcity incidents, and logistics key performance indicators (KPIs).” (Daily Trust)