LAGOS, NIGERIA – In a significant move for Nigeria’s petroleum sector, the Dangote Petroleum Refinery has reached an agreement with the Independent Petroleum Marketers Association of Nigeria (IPMAN) to supply 60 million litres of Premium Motor Spirit (PMS), commonly known as petrol, each week. This deal, which will see IPMAN members lift petrol directly from the Dangote refinery, marks a key development in Nigeria’s fuel distribution system, as the country moves towards greater self-sufficiency in petrol production.
The arrangement, expected to begin in the coming weeks, will provide IPMAN with up to 240 million litres of petrol monthly, substantially increasing the association’s distribution capacity. This deal is part of Dangote’s strategy to streamline fuel distribution across Nigeria, as the refinery continues to ramp up its operations.
According to Chinedu Ukadike, IPMAN’s National Publicity Secretary, the new agreement will allow the association’s members to directly access fuel from the Dangote refinery without intermediaries. “Before now, most of the imported products in Nigeria were distributed through IPMAN. So, we can now off-take the products, no matter the millions of litres produced. Dangote has offered to supply us over 60 million litres weekly, depending on our patronage,” Ukadike said.
Enhancing Fuel Distribution Efficiency
The agreement represents a major shift in how fuel is distributed across the country. Previously, IPMAN’s members had to rely on importing petrol and dealing with logistical bottlenecks, but now, with direct access to Dangote’s refinery output, distribution will be more efficient and predictable.
The 60 million-litre weekly supply is set to scale according to demand, providing flexibility as the association adjusts its distribution network across Nigeria. Ukadike confirmed that operations are expected to commence by the end of November, with both parties finalizing the necessary documentation.
“We are finalizing discussions and sorting out the documentation. Once completed, we will begin off-taking PMS from the Dangote plant. This is expected to happen before the end of this month,” Ukadike said.
Reducing Nigeria’s Dependence on Imported Fuel
As Nigeria’s largest refining operation, the Dangote refinery is poised to reduce the country’s reliance on imported fuel, which has long been a financial burden for the nation. By directly supplying IPMAN, Dangote aims to address Nigeria’s fuel distribution challenges, improve supply stability, and reduce the cost of petrol for consumers.
The agreement comes at a crucial time, as Nigeria’s petrol sector is undergoing significant changes, especially following the deregulation of the fuel market. With increased competition from new imports by the Nigerian National Petroleum Company (NNPC) and other independent marketers, petrol prices have been declining in recent weeks. The Dangote-IPMAN deal is expected to further drive down costs and stabilize fuel supply in the country.
Streamlining Transactions and Securing Payments
To manage the off-taking process efficiently, IPMAN has established a Special Purpose Vehicle (SPV), which will oversee product distribution and ensure guaranteed funds for transactions. This new structure replaces the previous system, where individual marketers were tasked with purchasing small quantities of petrol, often leading to inefficiencies and delayed deliveries.
Implications for the Nigerian Fuel Market
This landmark deal between Dangote and IPMAN is poised to transform Nigeria’s fuel distribution landscape. By ensuring a more direct supply of locally refined petrol, it not only promises to ease distribution challenges but also strengthens the country’s move towards energy independence.
With Dangote’s refinery set to become a dominant player in the market, the agreement with IPMAN is expected to have far-reaching implications for Nigeria’s petrol pricing and availability, benefiting both consumers and marketers. As the country seeks to stabilize its energy market and reduce import costs, this deal marks a key milestone in the evolution of Nigeria’s petroleum industry.