Amid rising depot prices, Nigerian oil marketers are jostling to join the bulk-purchase agreement initiative offered by the Dangote Petroleum Refinery. The scheme, which provides guaranteed price stability, has become an attractive alternative to depot purchases, where prices are subject to frequent upward revisions.
Two major players in the downstream sector, Ardova Plc and Heyden Petroleum, recently joined MRS Oil Nigeria Plc in securing bulk purchase agreements with Dangote Refinery. These agreements have enabled them to sell petrol at more competitive pump prices, a strategy that has drawn the interest of other marketers.
The Independent Petroleum Marketers Association of Nigeria (IPMAN) has expressed strong interest in the scheme. According to IPMAN President, Alhaji Abubakar Maigandi Garima, members are exploring ways to pool resources to meet the minimum purchase requirement of two million liters at N909 per liter, compared to the N950 per liter recently announced by depot owners.
“We can no longer rely solely on depot owners when we have an opportunity to buy directly from the refinery at a stable price,” Maigandi stated, urging members to organize themselves to meet the bulk-purchase criteria.
The Dangote Refinery’s incentives are part of a broader economic strategy tied to President Bola Ahmed Tinubu’s crude-for-naira swap initiative, aimed at stabilizing Nigeria’s fuel market and reducing pump prices for consumers. Since the introduction of the initiative, MRS, Ardova, and Heyden have gained a competitive edge, offering steady supplies at lower prices while delivering superior fuel quality praised by motorists for its impressive burn rate.
Enhanced Market Stability and Consumer Benefits
The refinery’s bulk-purchase program ensures consistent supplies of refined petroleum products at competitive rates, strengthening energy security across the nation. Ardova and Heyden have leveraged the agreement to expand their retail presence, with over 1,000 outlets nationwide now offering fuel at reduced prices.
MRS Oil, for instance, recently cut its pump price to N935 per liter nationwide, addressing disparities in fuel prices between regions. This move has positively impacted consumer sentiment and boosted MRS Oil’s stock performance, with shares reaching a 52-week high.
Transformation in the Sector
The bulk-purchase agreements are reshaping Nigeria’s downstream oil and gas industry by creating a more competitive environment. The availability of affordable, high-quality fuel is expected to ease the burden on consumers while stabilizing the nation’s fuel market.
The success of early adopters like Ardova, Heyden, and MRS has encouraged more marketers to seek similar partnerships with Dangote Refinery. Many of these marketers, particularly those with stations near the refinery in Ibeju-Lekki, Lagos, are eager to benefit from the operational efficiencies and cost advantages that the agreement offers.
By guaranteeing steady and reliable supply chains, the Dangote Refinery initiative is poised to address Nigeria’s recurring issues of fuel scarcity and price instability. The program reflects a significant step toward achieving energy security and fostering economic resilience in the country.
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