Marketers mull crash in prices, as Dangote Refinery begins sale of Diesel, aviation fuel

Petroleum Marketers in Nigeria are anticipating a crash in the prices of Diesel and aviation fuel (Jet A1) following the commencement of sale by the Dangote Refinery.

As at January 14, 2024, the refinery was awaiting regulatory approval for commercial rollout of its products with the company announcing that it has commenced registration of distributors for its products.

According to the company, members of three prominent associations that constitute 75 percent of the total market in Nigeria have been registered; The associations are Depot and Petroleum Products Marketers Association of Nigeria (DAPPMAN), Independent Petroleum Marketers Association of Nigeria (IPMAN), and Major Oil Marketers Association of Nigeria (MOMAN).

The President of the Independent Petroleum Marketers Association of Nigeria (IPMAN), Abubakar Maigandi confirmed this to newsmen in a chat.

According to him, “local oil marketers set the price at 1,225 naira ($0.96) per litre for diesel after securing a bulk purchase agreement, prior to adding their mark-up.”

“The price of diesel is going to fall because of the release of products from Dangote Refinery. In fact, it is already coming down in Lagos.”

Similarly, the Depot and Petroleum Products Marketers Association of Nigeria (DAPPMAN) said its members were seeking letters of credit to buy petroleum products from Dangote.

“Our members are discussing with banks and these talks have reached advanced stages, when we have our letters of credit, we will begin lifting products,” Femi Adewole, the association’s executive secretary said.

Confirming the development, Dangote Group Executive Director, Strategy, Portfolio Development & Capital Projects, Devakumar Edwin, said that the company has begun distributing diesel and jet fuel to the local market.

“We have substantial quantities. Products are being evacuated both by sea and road. Ships are lining up one after another to load diesel and aviation jet fuel.”

“Ships load a minimum of 26 million litres, though we try to push for 37 million litres vessels, for ease of operations,” Edwin told Reuters.

The Dangote Refinery according to its Chief Executive, Alhaji Aliko Dangote can load 2,900 trucks a day at its truck-loading gantries while the products from the Refinery will conform to Euro V specifications.

The Dangote Refinery, positioned on a peninsula near Lagos’s commercial centre, represents Africa’s largest refinery project, completed after many postponements and financed with an investment of $20 billion.

With the capacity to process up to 650,000 barrels per day, the refinery is set to be the largest in both Africa and Europe once it attains full operational capacity, expected this year or the next.

The Dangote Refinery is expected to significantly reduce Nigeria’s dependence on imported petroleum products.