- This has spurred many experts to predict that Dangote will venture into the downstream sector at some point to have considerable control over the logistics of fuel distribution across the country and not have to rely on middlemen who make simple things complex for their own gains.
The Dangote refinery has taken a bold and audacious step that will not only permanently disrupt Nigeria’s downstream Petroleum sector but also shape the nation’s economy in many ways. Since opening its refinery in 2023, Dangote refinery has had to deal with players in the upstream and downstream sectors who are constantly looking for how to sabotage its goal and plan to wean Nigeria off its dependence on imported refined petroleum products that are putting a huge strain on the nation’s finances. If he is not contending with unscrupulous officials of government’s regulatory agencies, he is fending off greedy individuals and vested interests deeply secreted in the value chain of the downstream sector and see Dangote’s foray into the oil & and gas industry as a threat to the continuation of their nefarious and criminal activities.
But the toughest and most draining war of attrition came from the many players in the downstream sector. From depot owners to independent marketers and fuel importers, they all work in unison to create an environment so harsh and unconducive that Dangote will have no choice but to do their bidding and play by their rules. But anyone who knows a thing or two about the business model and strategy of Aliko Dangote knows that he does not take half-measures or shy away from a business battle in the brutal and unforgiving Nigerian economic terrain. He goes all in. Aliko Dangote’s business model is known for its vertical integration. This means he operates across the entire spectrum and value chain of his business franchises. This has spurred many experts to predict that Dangote will venture into the downstream sector at some point to have considerable control over the logistics of fuel distribution across the country and not have to rely on middlemen who make simple things complex for their own gains.
The downstream shake-up begins
What has long been nothing more than a harmless conjecture finally came to fruition. On Sunday, June 15, Dangote Petroleum Refinery announces the commencement of direct distribution of Premium Motor Spirit (PMS) and diesel across the country, signalling an imminent shake-up and massive disruption in the downstream sector.
In the statement, the company stated that effective August 15, 2025, it would begin the distribution of Premium Motor Spirit (PMS), commonly known as petrol and diesel, to marketers, petrol dealers, manufacturers, telecoms firms, aviation, and other large users across the country. The company said the arrangement comes with free logistics to boost the distribution network.
To ensure hitch-free take-off of the initiative, Dangote Refinery said it had invested in the procurement of 4,000 brand-new Compressed Natural Gas (CNG) powered tankers. It said that this phase of the programme would continue over an extended timeframe.
What Dangote is offering
Dangote said, “This strategic programme is part of our broader commitment to eliminating logistics costs, enhancing energy efficiency, promoting sustainability, and supporting Nigeria’s economic development. It affirms our dedication to improving the availability and affordability of fuel, in support of broader efforts to strengthen the economy and improve the wellbeing of all Nigerians.
“Under this initiative, all petrol stations purchasing PMS and diesel from the Dangote Petroleum Refinery will benefit from this enhanced logistics support. Key sectors such as manufacturing, telecommunications, and others will also gain from this transformative initiative, as reduced fuel costs will contribute to lower production costs, reduced inflation, and foster economic growth. Players in these key sectors and others can purchase directly from the Dangote Petroleum Refinery.
“In addition, the refinery will offer a credit facility to those purchasing a minimum of 500,000 litres—allowing them to obtain an additional 500,000 litres on credit for two weeks, under bank guarantee. This pioneering effort marks a major milestone in our vision to revolutionise Nigeria’s energy sector,” the company added.
Underscoring his commitment to ensuring that no place was left behind, it pointed out that “Our goal is to provide equitable access to affordable fuel for all Nigerians, regardless of location, making energy more accessible and sustainable for everyone, wherever they may be.”
Ripples rip through the downstream sector.
Dangote’s announcement has unsettled the hitherto Indispensable players and stakeholders in the downstream sector. From importers to depot owners to independent marketers, everyone is already warning of the dire consequences of Dangote’s move, saying it portends serious danger for the sector.
Historically, depot owners played the role of intermediaries between importers or refineries and retail stations, often charging premiums for storage and distribution.
However, Dangote’s model, built on a robust and efficient integrated supply chain and aggressive large-scale infrastructure investment, significantly cut down the need for third-party services.
PETROAN warns of monopoly and loss of business
Reacting to Dangote’s stepping into the fray, The Petroleum Products Retail Outlets Owners Association of Nigeria, PETROAN, said the plan by Dangote refinery to begin direct distribution of premium motor spirit and automotive gas oil nationwide, will create a monopoly in the downstream, sector which will lead to loss of jobs and closing down of businesses.
In a statement on Monday, the association argued that Dangote should be flexing its muscle on the world stage and competing with global refineries, not venturing into the downstream sector and starting operating as a distributor.
PETROAN makes demands
Speaking through its president, Billy Gillis Harry, PETROAN enjoined the Executive Director of the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) and the Minister of State for Petroleum to step in and put in place measures and price control mechanisms to forestall any form of monopolisation of the downstream value chain.
PETROAN cautions that more than 10,000 authorized retail outlets rely on accessing fuel from the open market. This system risks falling apart if Dangote assumes complete control as the exclusive gatekeeper.
PETROAN and other stakeholders are now calling for:
– Open access to loading depots and marine terminals.
– Enforcement of anti-monopoly laws under the Petroleum Industry Act (PIA)
– Fair pricing structures that allow independent marketers to compete
– Support for third-party logistics, not just refinery-owned transport fleets.
They claim that these measures will safeguard the diversity of Nigeria’s fuel supply and prevent replacing a flawed subsidy system with a monopoly controlled by the private sector.
Crunching the numbers
PETROAN’s claim of imminent job losses and closure of businesses may not hold much water when compared to what the economy will gain from Dangote’s foray into the downstream sector.
The Dangote Refinery can absorb the shock, and adverse impact its planned distribution of Petroleum products will have on other businesses and the economy as a whole.
The refinery currently employs 30,000 people directly and indirectly; 90% of its employees are Nigerians. Plans are also underway to increase the number of direct employees to 50,000.
With the announcement of its commencement of fuel distribution across the country, it will employ four thousand drivers for the four thousand CNG trucks the scheme will take off with. Another four thousand motor boys will be employed.
Add the above numbers to another four thousand people who will work for the company indirectly as mechanics, station attendants, and engineers at CNG mother and daughter stations deployed along the corridor. That is 12,000 jobs created.
What experts are saying
According to industry experts, Dangote’s foray into the downstream sector will not only disrupt existing supply chains but also tackle two key issues in Nigeria’s downstream sector: frequent fuel tanker accidents and incessant strike threats by petroleum tanker drivers.
“This is the Uber moment for the Nigerian fuel sector,” a senior oil executive told BusinessDay. “With 4,000 CNG tankers, the refinery can deliver directly to any station nationwide. This removes the need for depot owners unless they can offer something dramatically better or cheaper.”
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