The Dangote Refinery and Petrochemicals is set to launch its Compressed Natural Gas (CNG) trucks today, marking the start of nationwide distribution of Premium Motor Spirit (PMS).
In August, the Refinery announced the arrival of its first batch of 4,000 CNG-powered trucks for the fuel distribution program, which was initially scheduled to begin on August 15.
During a recent visit by the AfricaRice Centre to his Lagos office, Aliko Dangote emphasized that the decision to adopt direct fuel distribution was aimed at reducing reliance on third-party carriers for fuel distribution in Nigeria. He stated that this move is not just a strategic choice but a national necessity.
Last week, the Depot and Petroleum Products Marketers Association of Nigeria (DAPPMAN) accused the Refinery of offering lower prices to international buyers while quoting higher rates to local off-takers. They acknowledged the Refinery’s entry into the market but noted that its contribution accounts for only 30 to 35 percent of national demand.
DAPPMAN alleged that the Refinery does not provide free product delivery to buyers and criticized the constant price reductions as a strategy to monopolize the downstream market.
In response, Dangote explained that the decision to abandon the Single Point Mooring (SPM) system for fuel distribution was to avoid an additional cost of N75 per litre in handling charges, which could amount to N1.5 trillion annually.
The SPM system involves offshore distribution of petroleum products via a loading buoy for tankers. Dangote stated, “If the Dangote Refinery were to load 40 million litres of PMS and 15 million litres of AGO (diesel) via the SPM at an extra cost of N75 per litre in handling charges, it would result in approximately N1.5 trillion annually in avoidable expenses.”
He further explained that utilizing gantry loading and direct trucking would eliminate these costs, allowing for substantial savings that could be redirected towards critical infrastructure investments. “Losing N75 per litre to intermediaries who cannot guarantee delivery to the Nigerian consumer is not a viable option,” he added.
The Refinery’s CNG truck initiative, representing an investment of over N720 billion, aims to significantly reduce logistics costs and environmental impact while benefiting over 42 million micro, small, and medium enterprises (MSMEs) by lowering energy costs. The trucks, powered by CNG supplied by local partner Tetracore Energy Group, are designed to transport refined products directly from the refinery.
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