The Traffic

"Game-Changer Deal: Dangote Partners with IPMAN for 240 Million Litres of Fuel Monthly"

By Achimi Muktar

In a groundbreaking move set to reshape Nigeria’s petroleum industry, the Dangote Petroleum Refinery has inked a major supply agreement with the Independent Petroleum Marketers Association of Nigeria (IPMAN). The deal will see the refinery deliver 60 million litres of Premium Motor Spirit (PMS), commonly known as petrol, weekly to IPMAN, amounting to an impressive 240 million litres per month.

This historic agreement aims to stabilize the nation’s fuel supply while fostering competition in the deregulated petroleum sector. IPMAN officials confirmed that the arrangement would enable independent marketers to bypass intermediaries, directly accessing PMS from the $20 billion refinery.

A Boost for Independent Marketers

Chinedu Ukadike, IPMAN’s National Publicity Secretary, highlighted the significance of the partnership during an interview. “Before now, most of the imported products in Nigeria were distributed through IPMAN. This agreement gives us the ability to off-take millions of litres directly from Dangote,” he stated.

Ukadike revealed that the refinery has committed to supplying 60 million litres weekly, depending on demand, and said the association is finalizing documentation to ensure distribution begins by the end of November.

He added, “IPMAN is creating a Special Purpose Vehicle to streamline the distribution process and prevent the inefficiencies of dealing with middlemen. This guarantees a more efficient value chain and safeguards our members’ investments.”

Impact on Fuel Prices

The announcement of the Dangote-IPMAN deal is already causing ripples in the market. Fuel prices have begun to drop, with reductions of N10 to N15 per litre in some areas.

Ukadike attributed this to increased competition: “Independent marketers can now source products directly from producers. This has pushed prices down, and we expect further reductions as we fully implement the agreement.”

A major oil marketer corroborated this trend, stating that deregulation and competition are driving price adjustments. “We are noticing slight drops in prices, and this will likely continue as more players enter the market,” the marketer said.

The Bigger Picture: Nigeria’s Fuel Landscape

The partnership comes at a time when the Nigerian National Petroleum Company Limited (NNPCL) and private marketers have been importing billions of litres of fuel to meet demand. Between October and early November, over two billion litres of PMS were imported, even as the Federal Government moves to reduce reliance on imports by supporting local production.

Despite Dangote’s refinery commencing operations in September, Nigeria still imports significant quantities of PMS. However, industry stakeholders believe that deals like the one with IPMAN will gradually reduce this dependence.

Challenges and Opportunities

While the deal marks a step forward, IPMAN members continue to face challenges, including delays in the payment of a N10 billion Petroleum Equalisation Fund by the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA).

“Although the NMDPRA promised to resolve this, marketers are still waiting,” said Hammed Fashola, IPMAN’s National Vice President.

What’s Next?

With the Dangote-IPMAN partnership expected to begin full implementation by the end of November, Nigerians could witness a more stable and competitive fuel market. The initiative not only promises to streamline distribution but also paves the way for reduced prices, benefiting consumers nationwide.

As Nigeria continues to navigate its journey toward full deregulation, the success of collaborations like this could set the tone for a more efficient and self-reliant petroleum industry.