By Jibrin Abubakar, PhD
In his 2012 book, titled, Onward, the CEO of Starbucks, Howard Schultz, penned: “Any
business today that embraces the status quo as an operating principle is going to be on
a death march.”
Schultz’s metaphor finds validation in Nigeria’s petroleum sector, where Dangote
Petroleum Refinery now encounters not just market forces but what industry insiders
describe as ‘an entire ecosystem of entrenched interests’ protecting the troubled status
quo.
To combat this systemic challenge, Dangote Refinery is implementing a strategic solution:
the phase rollout of 4,000 Compressed Natural Gas (CNG)-powered trucks,
complemented by a network of specialized refueling stations. This innovative logistics
framework is designed to circumvent Nigeria’s chaotic fuel distribution network, while
promoting cleaner energy alternatives.
The trucks, according to the company, will supply petroleum products directly to retailers,
industrial users, and critical infrastructure operators, including telecoms providers and
airports.
By cutting out middlemen and leveraging cheaper CNG, the scheme aims to reduce
transport costs, which is a long-overdue remedy for a country where fuel scarcity and
price volatility have stifled growth.
Petroleum economists have always attributed volatile global oil prices to geopolitical
tensions and supply disruptions, fluctuations that traditionally trigger domestic fuel hikes
in import-dependent Nigeria.
Analysts anticipate that Dangote’s integrated logistics network could now cushion these
shocks, stabilizing pump prices despite international market turbulence.
As with any transformative move, the 650,000bpd refinery seems to have stirred up a
hornet’s nest and spurred commentariats.
The multibillion-dollar petroleum complex anticipates at least 15,000 new jobs, coinciding
with the logistics plan, estimated at N720 billion- an exercise projected to save Nigeria
over N1.7 trillion yearly.
Market watchers note that Dangote’s CNG fleet represents a triple play for Nigeria’s
economy: creating mass employment, stabilizing fuel supplies, and undercutting
smuggling networks. It would also ensure more stable fuel supplies while maintaining
competitive pricing for consumers.
A statement from the company’s spokesman, Anthony Chiejina, had said: “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
programme will continue over an extended timeframe. 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 programme is part of our broader commitment to eliminating logistics
costs, enhancing energy efficiency, promoting sustainability and supporting Nigeria’s
economic development. It affirms our dedication to improving the availability and
affordability of fuel, in support of broader efforts to strengthen the economy and improve
the well-being of all Nigerians.”
The Presidency is not standing aloof.
In its reaction, Presidential Compressed Natural Gas Initiative (PCNGI) welcomed the
Refinery’s fuel distribution plan, saying the decision is not just significant in scale, it is strategic.
PCNGI’s Commercial Coordinator, Tosin Coker, said the effort sends a powerful signal to
the market that CNG is no longer a future aspiration but a present-day solution to energy
cost, emissions, and supply chain risks.
As part of Nigeria’s energy transition strategy, the Federal Government introduced the
Presidential CNG Initiative in 2023 to promote widespread adoption of Compressed
Natural Gas. Officials project the conversion could deliver significant savings for
consumers, with CNG prices potentially lower than conventional petrol or diesel.
Echoing the same thought, Independent Petroleum Marketers Association of Nigeria
(IPMAN) described the initiative as a bold move that will be beneficial to the economy.
IPMAN also noted that the initiative will help address the long-standing challenge of
relying on expensive transportation from coastal depots.
According to The Guardian, IPMAN’s National Publicity Secretary, Chinedu Ukadike, stated
that the new model would significantly reduce logistical burdens for independent
marketers by delivering more affordable fuel directly to filling stations.
“Our pipelines have been non-functional for years, yet nothing has been done to revive
the infrastructure linking the country’s 21 depots. We’ve had to rely on expensive
transport from coastal depots. Dangote’s intervention lifts a huge burden off the
shoulders of independent marketers,” Mr. Ukadike was quoted as saying.
“Under this initiative, all petrol stations purchasing PMS and diesel from the Dangote
Petroleum Refinery will benefit from this enhanced logistics support. Key sectors such as
manufacturing, telecommunications, and others will also gain from this transformative
initiative, as reduced fuel costs will contribute to lower production costs, reduced inflation,
and foster economic growth. Players in these key sectors and others can purchase directly
from the Dangote Petroleum Refinery.
“In addition, the refinery will offer a credit facility to those purchasing a minimum of
500,000 litres—allowing them to obtain an additional 500,000 litres on credit for two
weeks, under bank guarantee.
Aside from fuel easily getting to people’s doorposts across the country, the IPMAN
spokesperson said the company’s new plan will relieve marketers of unnecessary costs.
“But if you look at Dangote’s statement you will see that a heavy load has been lifted out
of the independent marketers,” he said.
Aligning his thought with IPMAN’s, the Chief Executive of Financial Derivatives Company,
Bismarck Rewane, said the company’s free distribution initiative would reduce production
costs, ease inflationary pressures, and stimulate economic growth. He dismissed concerns
about the refinery becoming a monopoly and argued that inefficiencies in the sector had
been systemic and long-standing, adding that the scheme would help curb the parasitic
role traditionally played by middlemen.
“What Dangote is doing achieves two key objectives: delivering products across the entire
country at a uniform price by eliminating bridging costs and significantly reducing logistics
expenses using Compressed Natural Gas (CNG)-powered trucks to reach every corner of
the nation. In economic terms, middlemen (who typically do not invest) are often viewed
as parasitic, extracting margins simply for distributing goods. Dangote is bypassing this
layer by directly handling distribution and, notably, providing credit facilities to the retail
end of the business,” Mr. Rewane said.
In contrast, the Channels TV reports that the company’s fuel distribution plan was greeted
with complaints by oil marketers under the auspices of the Petroleum Products Retail
Outlets Owners Association of Nigeria (PETROAN). The group said the initiative would
deprive depot owners, truck operators, and retail outlets who have special deals for the
direct delivery of petrol and diesel to large corporations and multinationals.
There are also concerns over job losses.
However, that claim overlooks a key point: the new trucks will be operated by Nigerian
drivers and logistics personnel.
Co-founder of Dairy Hills, Kelvin Emmanuel, noted that Dangote’s strategy would
significantly reduce distribution costs, a critical step toward passing the gains of refining
on to Nigerian consumers.
Dangote’s initiative is not altogether new in the global oil space. While Dangote’s
approach mirrors strategies employed by oil majors like Saudi Aramco, for instance; its
implementation reflects unique adaptations to Nigeria’s challenging operating
environment.
Cheaper logistics, experts say, would translate to lower pump prices, lower inflation, and
more profitability for small enterprises. With Nigeria’s supply chain costs consuming
nearly half of product prices in certain industries, any cost-cutting measure would be a
welcome idea for the economy.
There are indications that early deployment of the new trucks will concentrate on major
commercial cities, and gradually into the hinterlands and to every corner of the country.
Similarly, the CNG refueling stations are expected to be rolled out in stages, starting
alongside the deployment of the tankers.
The company has also sought to allay concerns about monopoly of the downstream
logistics sector.
The company’s management also said it plans to list the petroleum complex on the stock
exchange, a move widely applauded by stakeholders.
At an event in Abuja recently, President of the Dangote Industries Limited(DIL), Aliko
Dangote, said: “The reality is that for too many people who have both the means and
the opportunity to contribute meaningfully to our nation’s growth, choose instead to
criticize from the sidelines while investing their wealth abroad, adding little to Nigeria’s
real economy. We have chosen to bet on Nigeria and will continue to do so.”
Beyond NNPC, Nigeria’s refining landscape now includes nine modular plants, with
regulatory frameworks actively welcoming new investors to expand capacity.
Analysts suggest that by vertically integrating its supply chain, Dangote could directly
translate operational efficiencies into consumer cost savings.
According to the company: “This initiative is in line with the Renewed Hope Agenda of
His Excellency, President Bola Ahmed Tinubu, reflecting our shared commitment to
economic progress, stability, and inclusive development. We sincerely thank the Federal
Government for its continued support, especially through the Naira-for-Crude scheme,
which has helped stabilize fuel supply amid global price volatility. It marks a major
revolution in the midstream and downstream sectors and stands as a key example of
President Bola Tinubu’s bold and reformative economic policies.”
With its game-changing fleet of CNG trucks, Dangote Refinery isn’t just transporting fuel,
it’s driving Nigeria’s energy future.
Dangote Petroleum Refinery’s bold move has cracked the old system, proving that
cleaner, cheaper and more efficient energy logistics are possible.
Dr. Abubakar writes from Adamawa Plaza, Central Business District, Abuja.
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