Business
DAPMAN, NARTO, others in trouble over Dangote’s direct fuel supply
The expected takeoff of Dangote Refinery’s direct fuel distribution initiative on August 15 has continued to cause fear and anxiety among major players that had held the nation’s midstream and downstream petroleum sectors captive for more than two decades.
Already challenged by the loss of a substantial market share to Dangote Petroleum Refinery located at Ibeju-Lekki area of Lagos State, which began operations in January 2024, the launch of the refinery’s direct fuel distribution initiative, experts say, will pull the carpet from under the feet of the oil cartel.
The management of Dangote Refinery had on June 15, 2025, announced the conclusion of plans to start the supply of petrol and diesel directly to fuel stations, manufacturers, telecommunications firms, airlines and other heavy users across the country.
Benefits of the initiative are far-reaching. According to the company, the initiative comes free of delivery costs across the nation, total elimination of logistics costs, lower fuel prices at the point of sale, improved fuel accessibility for both urban and rural consumers, guaranteed long-term energy security, credit facility for bulk buyers supported with bank guarantee, and many other advantages.
“Dangote Petroleum Refinery is pleased to announce the commencement of a significant national initiative designed to transform Nigeria’s fuel distribution landscape.
“Effective 15th of August 2025, the refinery will begin the distribution of premium motor spirit (PMS) and diesel to marketers, petrol dealers, manufacturers, telecom firms, aviation, and other large users across the country, with free logistics to boost the distribution network.
“To ensure smooth take-off of this scheme, Dangote Refinery has invested in the procurement of 4,000 brand-new compressed natural gas (CNG)-powered tankers.
“This phase of the program will continue over an extended time-frame. The refinery is also investing in compressed natural gas (CNG) stations, commonly referred to as daughter booster stations, supported by a fleet of over 100 CNG tankers across the country to ensure seamless product distribution.
“This strategic program is part of our broader commitment to eliminating logistics costs, enhancing energy efficiency, promoting sustainability, and supporting Nigeria’s economic development.
“In addition, the refinery will offer a credit facility to those purchasing a minimum of 500,000 liters—allowing them to obtain an additional 500,000 liters on credit for two weeks, under bank guarantee.
“This pioneering effort marks a major milestone in our vision to revolutionize Nigeria’s energy sector”, the company said.
Many Nigerians, especially energy and economic experts, have welcomed the announcement by Dangote, describing it as a game changer in the nation’s downstream petroleum sector.
According to Dr. Daniel Ekeh, a oil and gas expert, the real winner of this latest initiative is not Dangote, but the Nigerian people, who are made to pay for the inefficiencies in the fuel distribution chain.
“About 30% or more of what Nigerians pay for a litre of diesel and petrol goes to storage, transportation and other logistics services.
“That’s what applies in other sectors of the economy like the cement and foods beverages industries where producers largely bear the cost of transportation and storage. This is a new dawn in Nigeria”, Ekeh declared.
However, while Nigerians are busy lauding the initiative, fuel depot owners, marketers and tanker owner are concerned about its implications on their businesses.
Inherent Threat of Policy
Some operators, who spoke to our correspondent on the matter, argued that the free fuel supply initiative will be counter productive for their own businesses.
“By implication, what the initiative means is that Dangote Refinery will now be responsible for the distribution of petroleum products directly to users, ditching middlemen, such as tank depot and farm owners, tanker owners and marketers.
“Before now, it was depot and tank farm owners that were at the receiving end of the Nigerian Midstream and Downstream Petroleum Regulatory Authority’s (NMDPRA) decision to allow Dangote sell fuel directly from its gantries. Now, marketers and transporters are going to bear the brunt,” a concerned fuel marketer, who did not want his identity disclosed lamented.
According to Business Hallmark’s Downstream Petroleum Sector Outlook for Q3′ 2025, operators in the sector, especially members of the Major Energies Marketers Association of Nigeria (MEMAN), Depot and Petroleum Marketers Association of Nigeria (DAPMAN), and the National Association of Road Transport Owners (NARTO) are going to be negativity impacted by the Dangote Refinery direct fuel supply initiative, except they quickly find a better and more appealing alternatives to sell to their customers.
Already, the need for large and expensive storage tanks to store imported petroleum products has almost disappeared with the commencement of operations of the Dangote Refinery, which refine crude oil daily and sell directly into tankers at its loading bay.
Based on BH estimates, these storage facilities, built and maintained at a huge cost of several billions of dollars, add to the burden of fuel consumers. Consumers currently pay between N40 to N100 per litre of petrol in storage fees alone.
Apart from fuel storage costs, motorists also pay heavily for fuel transport cost. For instance, there are three layers of transport cost pricing: distance from original source to the main terminal; distance from the main terminal to the various locations of depots, and distance from the local depot to filling stations.
Extra Costs of Fuel
Findings revealed that imported fuel entering Nigeria are first discharged by mother vessels that brought them into storage facilities at the Atlas Cove Terminal, Apapa, Lagos owned by the Nigerian National Petroleum Company Limited (NNPCL).
It is then transferred to daughter vessels, which then move them to fuel terminals in Ijegun, Apapa, Satelite Town and other locations in Lagos, as well as terminals in Warri, Port Harcourt and Calabar in Delta, Rivers and Cross River States. It is from these terminals that marketers send their tankers to load.
However, with marketers and bulk buyers now able to receive fuel directly from the Dangote Refinery (storage and transportation), they will no longer be bearing the extra logistical costs, translating to more income for them.
Some of the beneficiaries of the initiative include manufacturing firms, airlines, and telecommunication companies that consume large quantities of fuel.
For instance, a Boeing 737 series with a capacity of 136, consume 4,500 litres of fuel for a one hour Lagos to Abuja flight.
Meanwhile, findings show that while some airlines in the country use about 80,000 litres for their operations daily, others with higher flight frequencies like Air Peace use 180,000 litres and above, depending on their level of operations.
Potential Losers
Though, full details of the Dangote fuel supply initiative are not yet out, major fuel dealers that supply aviation fuel to airlines, including TotalEnergies, 11Plc (formerly Mobil), Ardova and Masters Energy may end up the losers.
Another group of operators that will be on the receiving end of the Dangote fuel supply initiative, is NARTO. Our correspondent gathered it cost about N25 to N30 to transport a litre of petroleum products within the South Western part of the country. This translates to between N825,000 to N990,000 cost to move 33,000 litres in the South West, which is borne by fuel marketers.
With the cost now absorbed by Dangote, marketers won’t have to continue with existing arrangements with private truck owners.
BH reliably gathered that while most fuel tankers bear the names and logos of marketers, they are owned by haulage firms and wealthy individuals, who farm them out to the marketers for a fee.
“Virtually all trucks supplying fuel to marketers are not owned by them, despite being branded in their names and colours. In fact, only few marketers own their trucks. They mostly contract the job of moving their products to haulage and logistics companies.
“The coming on board of Dangote’s CNG tankers will mean instant death for the old and inefficient tankers that run on diesel, which presently cost about N1,000 per litre. Compare it to Dangote’s CNG trucks, which will run on compressed gas, that currently sells for N235 per kilogram (1 litre).
“Most of the tankers will naturally go off the road, with the powerful union made redundant. It will not only result in instant death for fuel tankers running on diesel, but also ensured the collapse of several storage depots owned by cartel members, who continue to resist the incursion of Dangote into the market.
“What the oil cartel feared the most has finally happened. Their era is coming to an end. The inevitability of change has arrived with ‘a new kid on the block”, said an industry watcher, who begged for anonymity
Fight for Survival
Meanwhile, affected depot owners and marketers are not going down without a fight. Many have come out openly to kick against the initiative by Dangote.
Leading the fight is the Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN), which said the initiative is monopoly in disguise.
Speaking on behalf of the association, its Public Relations Officer, Joseph Obele, said the plan poses significant job loss threat.
“With a production capacity of 650,000 barrels per day, PETROAN argues that Dangote Refinery should be competing with global refineries, not operating as a distributor in the downstream sector.
“This massive refinery, one of the largest in sub-Saharan Africa, is expected to satisfy domestic fuel demand and export surplus products.
“Dangote’s tactics include a pricing penetration strategy, where he reduced prices to capture market share, with the ultimate goal of forcing other filling station operators to quit the market.
“This could lead to a massive shutdown of filling stations across Nigeria, resulting in widespread job losses”, the PETROAN spokesperson said
He also warned that the introduction of 4,000 new compressed natural gas (CNG)-powered tankers by Dangote refinery poses a significant threat to the livelihoods of thousands of truck drivers and owners.
“While CNG trucks may offer a lower cost of transporting petroleum products, this shift could lead to widespread job losses in the industry,
“The initiative will significantly affect various stakeholders, including modular refineries, as their operations and market share may be threatened by Dangote’s dominance.
“Many filling station operators may be forced to shut down due to Dangote’s pricing penetration strategy and dominance, while the businesses of local suppliers of petroleum products may be negatively impacted by Dangote’s direct supply to end-users.
“Also, the operations and market share of telecom diesel suppliers may be threatened by Dangote’s dominance.
“It is obvious that Dangote plans to gain full monopoly of the downstream sector, which would enable the company to exploit Nigeria’s petroleum consumers”, the association warned.
In its reaction, the Major Energies Marketers Association of Nigeria said it’s ready to discuss with the management of Dangote Petroleum Refinery to fully understand the implementation of the plan..
The association, according to its Executive Secretary, Clement Isong, said marketers would also engage with the NMDPRA and other industry stakeholders in an effort to understand the new scheme from Dangote refinery.
“At this point, we are watching the market, trying to understand it. We have read it in the news. We need to understand exactly where it impacts and what it impacts before we can have some clarity as to how far it will go in terms of impact.
“And that requires a lot of discussion; discussion with Dangote himself, discussion with the authorities, discussion with other stakeholders.
“At some point in time, we shall engage and do what is necessary to protect the market should we have to do so. But for now, we are trying to understand exactly what this initiative is and how it will impact the market… Until we have clarity as to exactly what the initiative is, before we can engage”, the MEMAN boss said.
In his reaction, the Chief Executive Officer (CEO), Centre for the Promotion of Private Enterprise (CPPE), Dr. Muda Yusuf, said the initiative will benefit consumers, who are outside Lagos and currently paying a premium for additional cost of transportation.
“Incorporation of logistics into the internal supply chain framework minimises the risk of business disruptions by unionised truck drivers, such as the tanker drivers’ union. It is also good for better safety protocols in the transportation of petroleum products”, Yusuf said.
Also speaking, Ayodele Oni, Partner at Bloomfield Law Practice, said it is natural that private depot owners operating in the downstream sector will feel threatened .
“This is because depot owners rely on their role as distributors of PMS in the downstream sector of the industry to create revenue, as well as to create jobs for tank drivers.
“The depot owners charge significant premiums for storage and distribution”, he noted.
While advising marketers to resist the natural urge of opposing the move, he advised them to study how other countries have deregulated their petroleum sectors to encourage competition between refiners and independent distributors.