Fuel Marketers Caution Against Supply Disruption Amid Dangote’s Direct Distribution Plans

Fuel marketers in Nigeria have expressed deep concerns over the potential market disruptions that could arise from Dangote Refinery’s reported plan to bypass the traditional distribution structure and supply fuel directly to select retailers and end users. The move, they warn, could destabilize existing distribution chains, create unfair market advantages, and put thousands of independent operators at risk.

The Dangote Refinery, which began operations earlier this year, has quickly become a major player in the country’s downstream petroleum sector. Its capacity to refine up to 650,000 barrels per day positions it as a pivotal supplier capable of transforming Nigeria’s fuel landscape. However, the refinery’s intent to manage its own distribution network is raising alarms among marketers who rely on bulk purchasing and redistribution.

According to the Independent Petroleum Marketers Association of Nigeria (IPMAN), the traditional distribution model involves a broad network of marketers who purchase products from depots and supply them to filling stations across the country. Any attempt to circumvent this structure, they argue, would not only displace existing businesses but could also create monopolistic tendencies in the market.

“The move by Dangote to directly supply select retailers or consumers threatens the livelihood of thousands of marketers who have long invested in the distribution network,” said Chief Chinedu Ukadike, National Public Relations Officer of IPMAN. “It could eventually kill competition, distort pricing, and reduce access in remote areas that rely on smaller operators.”

Retail marketers under the Major Oil Marketers Association of Nigeria (MOMAN) also voiced their concern, emphasizing that any change to the current supply structure must be guided by regulatory frameworks to ensure fairness and efficiency. MOMAN stressed the importance of transparency and collaboration in integrating the refinery’s output into the national distribution ecosystem.

While Dangote Group has not officially confirmed a full-scale direct distribution rollout, sources familiar with the matter suggest that the company is exploring a hybrid model — blending direct supplies with depot-based sales — to maintain efficiency and cost competitiveness. This, according to analysts, is driven by the company’s aim to minimize logistics costs and control fuel quality through a shorter supply chain.

Industry watchers note that such a direct supply model could lower prices in the short term, particularly for consumers in urban centers, by cutting out intermediary costs. However, the implications for rural access and the survival of independent marketers remain a pressing concern. Rural stations often rely on coordinated supply from marketers who bear the costs of last-mile delivery.

Adewale Ahmed, an oil and gas consultant, explained that while modernization and efficiency are necessary for the sector, reforms must be inclusive. “It’s understandable that Dangote wants to streamline operations, but the downstream ecosystem is interconnected. If you isolate segments, you risk creating bottlenecks or leaving parts of the country underserved,” he said.

The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) is reportedly reviewing the developments and may issue policy guidelines to address stakeholders’ concerns. According to insiders, the Authority is keen on balancing market liberalization with equity and sustainability, ensuring that no player gains undue dominance at the expense of others.

Moreover, the conversation around direct fuel supply touches on broader issues of deregulation and competition in Nigeria’s petroleum sector. With the removal of fuel subsidies, there is growing interest in allowing market forces to determine prices and supply structures. However, many believe that such freedom must come with safeguards to protect small businesses and consumers.

Petroleum marketers are now calling on the federal government and regulators to initiate dialogues with Dangote Refinery and other major players to develop a comprehensive fuel distribution strategy that accommodates all stakeholders. They insist that without this, the ripple effects of a disrupted supply chain could include job losses, increased fuel scarcity in remote areas, and price hikes in the long run.

As Nigeria transitions toward a fully deregulated downstream market, the emergence of mega-refineries like Dangote’s marks a new era of possibilities and challenges. The key, experts say, lies in managing this transition through inclusive policies that foster innovation without displacing existing structures or undermining long-standing investments in the sector.