Experts: Dangote Refinery’s Fuel Distribution Scheme to Cut Inflation, Boost Jobs

•IPMAN praises free fuel distribution initiative

Peter Uzoho

Energy and public affairs experts have hailed the move by the Dangote Refinery to begin distribution of petrol, diesel and other petroleum products to marketers, petrol station operators, manufacturers, telecommunications companies, the aviation sector, and other large-scale users across Nigeria.

The refinery had said that it will come with free logistics support, in fulfillment of the promise by the company’s founder and Africa’s richest man, AlikoDangote, to shakedown the country’s downstream oil and gas industry.

A statement by the Dangote Group quoted the experts to have said that the business decision of the 650,000 barrels per day refinery has the potential to reduce inflation, create thousands of jobs, and lower the cost of petroleum products across Nigeria.

Crucially, the refinery’s plan to deploy 4,000 new Compressed Natural Gas (CNG)-powered tankers is expected to not only address the country’s long-standing distribution inefficiencies but also reduce the influence of intermediaries and contribute to environmental sustainability.

According to the statement, a university lecturer and public affairs analyst, DrAbimbolaOyarinu, stated that if successfully implemented, the policy could significantly reduce the power held by middlemen within the oil and gas distribution chain.

Oyarinu observed that these intermediaries, including tanker drivers, have historically held the sector, and sometimes even the state, to ransom.

“This initiative has the potential to dismantle the dominance of powerful middlemen, who have in the past stalled progress and held entities like the NNPC hostage. However, Nigerians will judge it by its impact on fuel prices. If it leads to cheaper petrol at the pump, it will ease inflation considering fuel costs and exchange rates are key inflationary drivers in Nigeria”, he said.

An energy analyst, Ibukun Phillips, described the move as “revolutionary”, stating that it could reshape Nigeria’s energy landscape by improving accessibility and affordability, especially in rural areas.

“Logistics currently account for between 10 and 30 per cent of fuel prices. Eliminating this cost will naturally reduce pump prices. Rural dwellers often pay more for fuel than those in urban areas, despite earning less. This initiative could revive disused filling stations and ensure more equitable distribution”, Phillips said.

She added that the scheme will also generate employment, with at least 8,000 drivers expected to be hired to kickstart the operation.

Speaking on a national television programme, energy expert and co-founder of Dairy Hills, Kelvin Emmanuel, said Dangote’s move to cover logistics costs marks a critical shift that could allow Nigerians to finally benefit from domestic refining.

He argued that concerns about the refinery becoming a monopoly are misplaced, pointing instead to systemic inefficiencies that have plagued the sector for decades.

“People have valid concerns. But let’s be clear: the real business marketers have been involved in isn’t selling PMS with margins of N5 to N15. Their real gains have come from exploiting arbitrage opportunities, often with substandard imports that don’t meet the sulphur specifications outlined in the Petroleum Industry Act (PIA).”

Emmanuel highlighted how logistical and regulatory failings have hampered fuel distribution.

“For instance, I can confirm that the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) currently owes independent marketers N1.8 billion in outstanding bridging claims. Whether these claims are valid is another matter—an independent forensic audit would be required to determine that”, he said.

According to Emmanuel, the Dangote Refinery is stepping in to address long-standing gaps in Nigeria’s fuel distribution system. He emphasised that fuel supply across the country remains inconsistent, with only Lagos, a few states in the southwest, and Abuja enjoying relatively stable and fair pump prices.

“Dangote is taking on the burden of transportation, storage, and bridging costs that should have been streamlined long ago. This is in response to the resistance from vested interests who have tried to frustrate fair and efficient distribution,” he said.

He further explained that the refinery’s current reliance on road transport is a strategic move to bypass infrastructural and bureaucratic bottlenecks.

“The immediate fix is the deployment of CNG-powered trucks to ensure last-mile delivery while avoiding delays caused by existing structural inefficiencies,” Emmanuel added.

Meanwhile, the Independent Petroleum Marketers Association of Nigeria (IPMAN), Rivers State Chapter, has  commended the management of Dangote Petroleum Refinery on the plan to commence free distribution of petrol and diesel to marketers, dealers, and large-scale consumers nationwide.

Dangote Refinery had announced that the distribution of the petroleum products will begin on August 15, 2025.

Chairman of IPMAN in the State,  TekenaIkpaki, who spoke with journalists yesterday in Port Harcourt, said the initiative is a bold and strategic move aimed at addressing some of the longstanding challenges facing stakeholders in Nigeria’s downstream petroleum sector, particularly independent marketers.

He listed the challenges to include “inconsistent supply, high transportation costs, infrastructural bottlenecks, and fluctuating market prices, all of which have adversely affected our ability to serve end users efficiently and sustainably”.

Ikpakisaid “As the majority stakeholder in Nigeria’s refining and fuel distribution value chain, Dangote Refinery is uniquely positioned to play a transformative role in enhancing the country’s energy security and logistics efficiency”.

According to him, the decision to deploy 4,000 brand-new Compressed Natural Gas (CNG)-powered tankers is a particularly forward-thinking investment, “which aligns with global sustainability goals while addressing domestic logistics constraints’.

The IPMAN boss in Rivers noted that the development is timely, “especially as the country continues to grapple with economic recovery efforts and energy supply challenges”.

He said: “By offering an alternative and reliable supply route alongside the Nigerian National Petroleum Company Limited (NNPCL), the Dangote Refinery provides marketers with critical access to competitive product sources, thereby reducing overdependence on any single supplier and promoting healthy competition”.

The association expressed the belief that such a multi-source supply model is essential to building a robust, competitive, and fair petroleum distribution ecosystem.

Ikpakicontinued that “More supply options mean greater flexibility for marketers, better pricing mechanisms, and, ultimately, more stability for Nigerian consumers at the pump. Furthermore, we see this initiative as a testament to what is possible when public-private partnerships and industrial leadership come together with a shared vision of national development.”

IPMAN advised that while the offer of free product distribution may appear generous, all stakeholders; including government regulators, should ensure that such programmes are implemented transparently and inclusively, so that independent marketers across all regions benefit equitably.

The association therefore reiterated their support for investments that improve the efficiency of fuel supply chains, including logistics, storage infrastructure, and pricing systems.

“At the same time, we urge continued regulatory oversight to maintain a level playing field in the market ensuring that no single player, regardless of size, operates at the expense of the broader market’s integrity.

“Importantly, we acknowledge that this initiative by Dangote Petroleum Refinery will complement the Crude-for-Naira initiative being implemented by the NNPCL, aimed at stabilizing the naira and ensuring consistent fuel supply. Together, these efforts by two of the nation’s energy giants represent a shared commitment to national growth, energy security, and market stability,” IPMAN stated.

The association further appreciated both Dangote Petroleum Refinery and NNPCL for their resilience, innovation, and continued support for stakeholders across the petroleum value chain, saying “Their combined efforts inspire confidence and offer renewed hope for a more efficient, affordable, and inclusive energy future for Nigeria”.

“I reaffirm our commitment to working collaboratively with Dangote Refinery, NNPCL, the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), and other stakeholders in the industry to ensure that the benefits of this new distribution initiative are maximized for all”, Ikpaki added.

He called on all stakeholders in the industry to come together to build a more resilient, inclusive, and prosperous downstream petroleum sector for the benefit of the Nigerian economy and the welfare of our people.