Oil marketers expressed mixed reactions to the recent demand by Dangote Petroleum Refinery that dealers must make advance payments to offtake products from the refinery in Lekki, Lagos State.
The policy was disclosed during a high-level stakeholder meeting convened by NNPC Group CEO Mele Kyari in Abuja.
Attendees included representatives from the Major Oil Marketers Association of Nigeria (MOMAN), Depot and Petroleum Products Marketers Association of Nigeria (DAPPMAN), and companies such as 11 Plc, Matrix Energy, AA Rano, and the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA).
Sources at the meeting revealed that Dangote is requiring advance payments from marketers, diverging from the traditional model where payment is made upon product arrival at depots.
“Paying upfront significantly increases financial pressure on marketers, particularly those with limited capital,” a source at the meeting disclosed.
“For decades, we’ve operated on a post-delivery payment model, which aligns better with our liquidity cycles,” the source continued.
The requirement has sparked debate among stakeholders, with negotiations ongoing to resolve the issue.
Marketers have expressed varied opinions on the policy.
While some see it as an unnecessary financial burden, particularly for smaller businesses, others consider it a prudent approach to ensure operational stability for the new refinery and mitigate risks associated with delayed payments.
The National Publicity Secretary of the Independent Petroleum Marketers Association of Nigeria (IPMAN), Chinedu Ukadike, explained the rationale behind the policy.
“The Dangote refinery is newly established and needs to build a customer base with high-volume off-takers,” Ukadike said in an interview.
“Independent marketers want to offtake large volumes but also seek credit facilities, which Dangote might offer as relationships are built over time,” he continued.
Ukadike added that IPMAN has set up a special-purpose vehicle to provide financing for small, medium, and high-volume off-takers.
“We are working with financial stakeholders to ensure marketers can access products.
With time, I believe concessions and logistical support will be granted,” Ukadike stated.
Another marketer, speaking anonymously, stated that discussions around the advance payment requirement are still ongoing.
“Negotiations are not finalized, and there are several details we need to resolve before reaching a consensus,” the source said.
Dr. Billy Harry, President of the Petroleum Products Retail Outlet Owners Association of Nigeria (PETROAN), noted that stakeholders, including NNPC Limited and marketers, have collectively agreed to halt fuel imports in favor of domestic production.
“We have agreed to stop importing fuel.
What remains is to stabilize the business environment,” Harry said.
“Advance payment isn’t new, but it requires additional financial support.
That’s why we requested a ₦100 billion intervention fund to cushion the effects of bank charges,” Harry continued.
He added that members are actively working to secure funding with favorable terms from banks to meet the requirements.
“We are optimistic that ongoing discussions will yield positive outcomes,” Harry concluded.
The Dangote Petroleum Refinery, one of the largest in Africa, is expected to play a pivotal role in Nigeria’s transition to local petroleum refining.
However, the current impasse over payment structures highlights the challenges of aligning traditional practices with the operational needs of a modern refinery.
