Dangote Refinery alone cannot meet Nigeria’s fuel needs, marketers warn
Story by Martha Gwary
Major oil marketers have insisted that the Dangote Petroleum Refinery, despite its recent sharp price cuts and rising domestic output, cannot single-handedly meet Nigeria’s petrol requirements, warning that over-reliance on one supply source is already creating challenges in the downstream market.
The Executive Secretary of the Major Energies Marketers Association of Nigeria (MEMAN), Mr Clement Isong, made this assertion while responding to questions on the impact of the refinery’s recent reduction in gantry prices from about ₦828 per litre to ₦699 per litre. The cut has driven pump prices down to around ₦739 per litre at many MRS filling stations nationwide.
Isong said that while all MEMAN members currently purchase petrol from the Dangote refinery, supply limitations, logistical constraints and timing challenges make it impractical for the refinery to serve as the country’s sole source of supply.
According to him, the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) made adequate preparations for the Yuletide season by approving licences for petrol importation.
“So many of my members — indeed all of them — buy from the Dangote refinery. They all buy from him. However, if everyone in Nigeria depends on one supplier, there are times when he cannot meet their needs — in terms of volume, timing and delivery method — and they have to look for alternatives,” Isong said.
He explained that while some marketers resort to imports, others buy from third parties who have imported fuel, stressing that marketers’ supply requirements differ widely and that dependence on a single refinery operating from one location inevitably creates bottlenecks.
“It is almost impossible for a single source to meet everyone’s needs when they want it, how they want it and in the quantities they require. Sometimes they want products delivered by vessel; at other times they want gantry loading in specific volumes. Queuing with others at one location makes it extremely difficult to meet all demands efficiently,” he added.
Isong disclosed that supply challenges have already resulted in some filling stations operated by major marketers running dry, despite the overall availability of petrol in the country.
“I visited some of my members’ stations today (Monday) and found that a few were dry because of the challenges they are facing in sourcing supplies. They all buy from Dangote when they can and how they can, but some stations are currently without products,” he said.
When asked whether the dry stations resulted from insufficient supplies from the $20bn refinery or from importers, Isong described the situation as chaotic, noting that reliance on a single source can easily disrupt supply.
“If you depend on one source and fail to secure supplies at the right time, you have to buy from someone else. That may mean importing or buying from a third party, often at a premium. Supplying stations under the current market conditions is not easy,” he explained.
He attributed the difficulties to intense pricing volatility, which has made effective supply planning extremely challenging for marketers.
Despite reports of dry stations in some areas, Isong dismissed fears of an imminent fuel scarcity, insisting that Nigeria currently has excess petrol in circulation, with more shipments expected.
“There is a glut in the system. There are excess products in the country, and more imported products are coming in. The regulator planned well for the season. Products are available everywhere; the challenge is buying at the right price for your station,” he said.
He added that many marketers are deliberately avoiding bulk purchases due to the risk of sudden price crashes, which could result in heavy losses.
“Bulk buying reduces unit cost, but if you buy in large volumes and the price crashes, the losses are significant. That is why marketers are being cautious,” Isong warned.
According to him, losses are currently being recorded across the entire value chain, including by the Dangote refinery itself. “Everybody is losing money. Even the producer has acknowledged this,” he said.
Last week, the Dangote refinery sent shockwaves through the downstream sector when it slashed its gantry price by ₦129 per litre, from ₦828 to ₦699. At a recent press briefing, the President of the Dangote Group, Aliko Dangote, alleged that some marketers planned to keep pump prices high despite the reduction.
Consequently, Dangote vowed to enforce the new pricing regime, with MRS retail outlets selling petrol at ₦739 per litre from last Tuesday. As more MRS stations in Lagos and Ogun states began dispensing petrol at the new price, motorists reportedly started avoiding outlets selling at higher rates.
This development forced other filling stations to reduce their pump prices by about ₦100 per litre — in some cases below their cost of purchase — underscoring the intensity of the price war in the downstream sector.
Meanwhile, the spokesperson of the Independent Petroleum Marketers Association of Nigeria (IPMAN), Mr Chinedu Ukadike, said any marketer who refused to lower prices risked losing customers, noting that patronage is now driven purely by pricing.
“We are in a competitive market where price determines patronage. Nobody is regulating you; the market will regulate itself. Wherever fuel is cheaper, that is where consumers go. We are in a price war, and demand and supply determine the price,” Ukadike said.
READ ALSO: Dangote Refinery begins nationwide PMS sales at ₦739 per litre via MRS stations
He added that with the gantry price now at ₦699 per litre, marketers must adopt competitive pricing to retain customers or risk losing capital to mounting bank interest.
Ukadike also disclosed that IPMAN has entered into a partnership with the Dangote refinery, noting that independent marketers have become key partners in evacuating its products nationwide.
“Dangote has now realised that independent marketers are strategic partners who can distribute his products quickly. Since then, we have provided significant patronage,” he said.
Meanwhile, the Dangote refinery has maintained that it has the capacity to meet Nigeria’s daily petrol demand. Aliko Dangote recently said the refinery supplies about 50 million litres of petrol to the local market daily, accusing the NMDPRA of issuing what he described as “reckless” import licences while his storage tanks were full.
Officials of the refinery have backed this position, insisting that the plant has sufficient capacity to meet nationwide fuel demand.
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