Dangote’s 4-Step Plan Shakes Fuel Market as Depots Face Survival Crisis

The downstream oil and gas sector in Nigeria has never experienced a disruption as profound as the ongoing wave created by the operational momentum of the Dangote Petroleum Refinery. For decades, fuel depots — mostly independently owned and clustered around coastal cities like Lagos, Calabar, Warri, and Port Harcourt — have played the middleman role in the nation’s fuel distribution matrix, serving as storage and distribution points for imported refined products.

This system, while lucrative, was plagued by inefficiencies, frequent fuel shortages, and billions of dollars in annual forex outflows. The narrative began to shift in late 2023 when the 650,000 barrels-per-day Dangote Refinery began partial operations, supplying diesel and aviation fuel. By early 2025, it expanded into the production and distribution of Premium Motor Spirit (PMS), fundamentally altering the logistics and economics of fuel supply in Nigeria.

The real shock came not just from the refinery’s production scale, but from a disruptive four-step distributorship strategy released on the company’s official X (formerly Twitter) handle — a move that signaled open market access and bypassed traditional depot bottlenecks. According to the refinery’s announcement, local businesses and individuals could obtain approval to distribute Dangote’s fuel products by following these four steps:

1. Formal Application: Submit a request on company letterhead stating interest in becoming a distributor.
2. Due Diligence: Undergo background and capacity checks by the refinery’s vetting team.
3. Infrastructure Requirement: Provide evidence of logistics capacity — including functional trucks or retail outlets.
4. Prepayment and Contracting: Sign a sales agreement and provide prepayment as required to lift products directly.

This open and streamlined process attracted thousands of small and medium-sized entrepreneurs, many of whom had long been excluded from the tightly-held fuel distribution network. Suddenly, access was no longer restricted to deep-pocketed depot operators and fuel marketers with government connections.

For depot owners, the implications were devastating. As Dangote’s prices undercut import-dependent sources, fuel retailers, transporters, and even cooperatives began bypassing traditional depot channels to source directly from the refinery or its nominated mega-distributors. Warehouses once filled with activity turned idle. Some depot owners began to default on bank loans; others slashed staff or shut operations.

The reflection within the industry is somber but instructive.

Key Takeaways:

1. Democratization of Fuel Distribution:
   Dangote Refinery’s four-step access model has opened the gates for inclusive participation in fuel distribution, reducing decades-long oligopolistic control by a few.
2. Legacy Infrastructure Must Evolve or Die:
   Fuel depots reliant on outdated import-based operations without integrating modern logistics or direct refinery partnerships are becoming obsolete.
3. Policy Meets Business Strategy:
   The refinery’s distributorship model aligns with the federal government’s energy security ambitions, putting local content, forex savings, and efficient distribution at the center of Nigeria’s fuel future.
4. Entrepreneurs Are the New Winners:
   The simplified distributorship process has empowered local players, promoted competition, and broadened fuel availability beyond major urban centers.
5. Call for Regulatory Balance:
   As smaller players thrive and larger ones stumble, there are growing calls for regulators like the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) to ensure a level playing field, prevent monopolistic behavior, and protect critical infrastructure.

The struggle of Nigeria’s fuel depots is more than a business crisis — it’s a wake-up call. The game has changed, and survival now demands agility, innovation, and partnerships. In this new era, access is no longer a privilege — it is policy-driven, performance-based, and open to those ready to adapt.

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