Dangote, IPMAN Seal 240 Million Litres Monthly Petrol Deal

The Dangote Petroleum Refinery has entered into a groundbreaking agreement with the Independent Petroleum Marketers Association of Nigeria (IPMAN), offering to supply 60 million litres of Premium Motor Spirit (PMS) weekly, translating into 240 million litres of petrol monthly.

This agreement marks a new phase in Nigeria’s oil distribution network and could reshape the downstream sector.

Chinedu Ukadike, the National Publicity Secretary of IPMAN, confirmed the deal, explaining that the arrangement will enable members to off-take large quantities of petrol directly from Dangote’s Lekki-based refinery. “We can lift from 10 million litres and above, and Dangote has offered to supply us over 60 million litres weekly, depending on our demand,” Ukadike said in an interview with The Punch.

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The deal, which is set to take full effect before the end of November, will cut out middlemen, enabling IPMAN members to purchase petrol directly from the refinery. Ukadike highlighted the importance of this shift: “IPMAN has developed a Special Purpose Vehicle (SPV) to handle this transaction, ensuring that our payments are guaranteed and that we have a steady, reliable fuel supply.”

This move is expected to tackle the longstanding issues of fuel shortages and financial mismanagement that have plagued Nigeria’s petroleum distribution system.

According to Ukadike, the partnership with Dangote will create a more organized and efficient distribution channel.

The announcement of the deal has already had a tangible impact on fuel prices, with petrol costs dropping by as much as N15 per litre in some parts of the country. “Competition is starting to drive prices down,” Ukadike noted.

“The moment IPMAN and Dangote made their intentions public, petrol prices began to fall. We expect this downward trend to continue as more marketers begin to source their products directly from the refinery.”

IPMAN sources confirmed that the reduction in petrol prices is a direct consequence of deregulation and increased competition within the sector. While pump prices are still above N1,000 per litre in some areas, industry experts expect further declines as the new distribution model kicks in.

However, the deal between Dangote and IPMAN comes at a time when fuel imports remain high, with the Nigerian National Petroleum Company Limited (NNPCL) and other marketers continuing to bring in substantial quantities of refined fuel.

Despite Dangote’s refinery producing petrol since September, industry analysts warn that full self-sufficiency in refined products may still be some time away, due to ongoing challenges in crude oil supply.

In a related development, Dangote Group is reportedly seeking to raise billions of dollars to secure a steady supply of crude oil and expand the refinery’s production capacity.

The company has been in talks with commercial lenders and development banks to fund these efforts, as it aims to increase the refinery’s capacity to 650,000 barrels per day.

The deal between Dangote and IPMAN also comes amid ongoing discussions around the payment of the Petroleum Equalisation Fund (PEF) to independent marketers.

While IPMAN has been assured that the N10 billion owed to members will be settled, there have been delays in the disbursement, with some marketers facing financial pressure.

Despite these challenges, the direct supply agreement between Dangote and IPMAN is a significant step forward in Nigeria’s quest to become less dependent on imported fuel and to stabilize petrol prices.