Nigeria’s long-anticipated fuel price relief remains elusive, even as Dangote Petroleum Refinery delivers Premium Motor Spirit (PMS) to marketers at no transport cost. The refinery’s bold free-delivery initiative was expected to ease pump prices nationwide, yet the reality at filling stations tells a different story with petrol still retailing around ₦992 per litre in Lagos and ₦955 in Abuja.
Industry analysts say that logistics delays, crude supply hurdles, and downstream inefficiencies are preventing the expected ripple effect on pump prices.
Free Delivery, But the Cost Still Moves
When the refinery introduced its free delivery model, it aimed to remove one of the major cost layers in the distribution chain transport. However, full implementation has been slowed by delays in the arrival of 4,000 compressed natural gas (CNG) tankers ordered from China.
Without these tankers, the refinery’s reach remains limited, especially to states in the far north and other distant markets. In Nigeria’s deregulated downstream market, logistics often account for up to 15 per cent of the final pump price meaning that every kilometre still travelled by third-party trucks adds to the consumer’s burden.
Energy analyst Habeeb Oladimeji explained, “Dangote’s free delivery can only impact prices if it’s efficiently executed nationwide. Until then, the gains are trapped within short-haul markets.”
Crude Supply Still a Bottleneck
Despite its refining strength, Dangote Refinery’s operations depend on consistent crude feedstock supply a factor still plagued by upstream uncertainty. The suspension of the naira-for-crude exchange policy and limited cooperation from international oil companies (IOCs) have forced the refinery to partially rely on imported crude priced in dollars.
This dependency exposes the refinery to foreign exchange volatility, raising input costs that cascade down the value chain. Industry insiders note that unless local crude allocation stabilises under a transparent pricing regime, downstream cost pressures will persist nullifying the benefits of free product delivery.
Downstream Market Dynamics: Why Prices Remain Sticky
Nigeria’s deregulated downstream sector is shaped by structural inefficiencies and cost layering. From refinery gate to retail pump, multiple charges transportation, storage, and dealer margins inflate final prices.
Even with free PMS delivery, several cost components remain stubborn:
- Exchange rate exposure drives dollar-linked import and operational costs.
- Haulage limitations hinder regional supply efficiency.
- Retail price inertia, where marketers are hesitant to adjust pump prices without guaranteed profit margins.
These realities explain what economists describe as “price stickiness” when market fundamentals resist quick downward adjustment despite cost-saving initiatives upstream.
Outlook: The Long Road to Price Relief
There is cautious optimism that once the 4,000 CNG tankers arrive and local crude sourcing improves, the refinery will achieve lower distribution costs and stronger market penetration.
According to Devakumar Edwin, Dangote’s Vice President for Oil and Gas, the company’s long-term strategy is to stabilise the domestic energy market through efficiency and innovation. “We are addressing the gaps step by step logistics, crude supply, and market transparency,” he said recently.
Dangote Refinery’s free PMS delivery policy represents a commendable move toward easing Nigeria’s high fuel costs. However, the anticipated consumer benefit remains distant, constrained by distribution bottlenecks and crude supply volatility.
In essence, free delivery does not yet mean cheaper petrol, not until Nigeria’s downstream ecosystem aligns with the refinery’s transformative ambitions.
