In October, the Dangote Petroleum Refinery entered a pilot supply arrangement with 20 major private depot operators, presenting it as a new pricing and distribution framework for Nigeria’s downstream market. The agreement, however, lasted barely one month. By November, the refinery had abandoned the depot-based model and begun supplying fuel directly to independent marketers.
Industry sources told Petroleumprice.ng that the partnership collapsed over pricing expectations, the return of petrol imports, and regulatory disputes that later escalated into a public confrontation with the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA).
The October Agreement
Under the pilot arrangement, each of the 20 depot owners agreed to lift 30 million litres monthly from Dangote. This amounted to a combined offtake of 600 million litres, a figure widely reported at the time.
The parties also agreed to base pricing on the international EBOB benchmark. Movements in global prices were expected to trigger corresponding changes in Dangote’s gantry rates.
Based on the framework, Dangote published the following prices:
- Ex-gantry: ₦828 per litre
- Coastal: ₦806 per litre
The model aimed to align domestic wholesale pricing with global benchmarks while guaranteeing a large volume offtake for the refinery.
Pricing Disputes and Return of Imports
After the first month, international oil benchmarks declined. Depot operators expected Dangote to reflect the drop in its gantry prices.
Market sources said the refinery adjusted prices, but not to the level anticipated by depot owners. Although Dangote later reduced its ex-gantry price to ₦699 per litre, data from the Major Energies Marketers Association of Nigeria (MEMAN) showed that the landing cost for imported petrol at the time averaged about ₦750 per litre.
Depot operators maintained that earlier price levels still made imports commercially viable. By November, several vessels began discharging at Nigerian ports, confirming a renewed wave of petrol imports. Industry reports documented the increase in arrivals, indicating that some marketers were again sourcing from abroad rather than relying solely on domestic refining.
Regulatory Tensions and Breakdown
Sources said Dangote viewed the resurgence of imports as a coordinated market response that undermined local refining. The refinery subsequently cut its ex-gantry price from ₦828 to ₦699 per litre—a ₦129 reduction that industry players described as the largest single price cut of the year.
Six days later, Dangote publicly accused the NMDPRA, then led by Farouk Ahmed, of issuing import licences that encouraged foreign supply despite domestic production capacity. The refinery characterised the development as a regulatory action that favoured importers over local refiners.
Industry operators say that the episode effectively ended the October partnership. The commercial relationship between Dangote and the 20 depot owners lasted about one month.
Shift to Direct Sales
Following the collapse, Dangote revised its distribution strategy.
Rather than supplying bulk volumes to major depot operators, the refinery began selling directly to independent petroleum marketers. Under the new structure, marketers with truck capacities of 250,000 litres and above can lift products directly from the refinery.
In practical terms, marketers capable of loading at least five trucks now qualify as direct customers. Industry sources say the approach allows Dangote to bypass established depot networks and deliver fuel closer to retail outlets.
The shift also reduces dependence on intermediaries that previously influenced coastal pricing, while expanding the refinery’s control over distribution and end-market access.
Market Implications
The breakdown of the October deal highlights underlying pressures in Nigeria’s downstream sector:
- Pricing expectations: Depot operators sought faster benchmark-linked price reductions.
- Import competition: The return of imports exposed coordination gaps in domestic supply.
- Regulatory friction: Disagreements over import licensing escalated commercial disputes into a policy conflict.
With the depot model abandoned, Dangote has opted for direct engagement with independent marketers. The move signals a strategic reorientation in fuel distribution—one that could reshape pricing power, supply chains, and market structure across Nigeria’s downstream petroleum sector.