In a development that could fundamentally alter Nigeria’s petroleum distribution landscape, the Dangote Petroleum Refinery is set to assume a role strikingly similar to the defunct Petroleum Equalization Fund (PEF). This ambitious move, commencing August 15, 2025, promises to deliver Premium Motor Spirit (PMS) and diesel directly to end-users nationwide, bypassing traditional intermediaries and offering a potential solution to long-standing inefficiencies and price disparities in the country’s fuel supply chain.
For decades, the Petroleum Equalization Fund (PEF), originally established in 1975 by General Yakubu Gowon’s Decree Number 9 and later amended in 1989 by General Ibrahim Babangida’s Decree Number 32, aimed to ensure uniform petroleum product prices across Nigeria by compensating marketers for transportation costs. Its functions were eventually subsumed into the Petroleum Industry Act (PIA) as “bridging allowances” when PEF merged with the Petroleum Products Pricing Regulatory Agency (PPPRA) and the Department of Petroleum Resources (DPR) to form the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA).
However, the NMDPRA has, for years, struggled to transparently publish bridging allowances. This failure is widely attributed to a significant mismatch between reported consumption revenues and total volumes lifted – a glaring indication, as industry observers have long suspected, that Nigeria’s actual daily fuel consumption is significantly lower than claimed figures. This lack of transparency has fueled speculation and contributed to market distortions.
Dangote’s Bold Intervention: A De Facto Equalization Fund?
The Dangote Refinery’s new initiative appears to step into this void, effectively becoming a de facto equalizer, albeit through a private sector-led model. By offering “free logistics” and deploying a massive fleet of 4,000 brand-new Compressed Natural Gas (CNG)-powered tankers, the refinery aims to directly deliver products to petrol station owners, manufacturers, telecoms firms, aviation companies, and other large users across Nigeria. This direct-to-customer approach, reminiscent of the PEF’s original intent, is designed to ensure uniform pricing and mitigate the inflationary impact of energy costs, which account for a substantial 20% of Nigeria’s Consumer Price Index (CPI) basket.
Commentary from industry experts suggests this could be a game-changer. “This initiative will not only help the stakeholders, especially the government, discover its actual daily consumption – which I don’t estimate to be more than 30 million liters per day – but it will also help deliver products directly to station owners all over Nigeria at an even rate,” remarked one analyst who preferred anonymity. “This will create uniformity of pricing and help manage inflation.”
Bypassing the Middlemen: A Two-Month Window for Direct Registration
A crucial aspect of this new scheme is the two-month window (June 16 to August 15, 2025) for station owners and large users to register directly with the refinery. This move is specifically designed to “boycott the middleman monopoly” and ensure products are delivered “CIF (Cost, Insurance & Freight).” This direct engagement is expected to dismantle the entrenched “systems cost” layered on by depot owners and import lobbies, who have historically been accused of hoarding stock to create artificial scarcity and distributing sub-standard products.
The press release from Dangote Petroleum Refinery explicitly states that this initiative will counter practices such as selling petrol that falls short of Section 317 (11) for approved sulfur limits or selling products with a compromised anti-knocking ratio, often disguised as “Africa spec.” This direct challenge to existing malpractices is a welcome development for consumers and legitimate marketers alike.
Massive Investment in CNG Logistics and Infrastructure
To facilitate this monumental undertaking, Dangote Refinery is not only acquiring the 4,000 CNG tankers but is also investing in a network of “daughter booster stations” – CNG stations – supported by over 100 additional CNG tankers nationwide. This strategic investment underscores the refinery’s commitment to eliminating logistics costs, enhancing energy efficiency, and promoting sustainability, aligning with broader national goals.
The refinery is also offering a significant incentive: a credit facility for those purchasing a minimum of 500,000 liters, allowing them to obtain an additional 500,000 liters on credit for two weeks, subject to a bank guarantee. This financial support could provide much-needed liquidity for marketers and help in the smooth flow of products.
Economic Ripple Effects and Alignment with “Renewed Hope” Agenda
The implications of this initiative are far-reaching. By reducing fuel costs, the refinery anticipates lower production costs for manufacturers, which in turn should contribute to reduced inflation and foster economic growth. The revitalization of previously inactive petrol stations, job creation, stimulation of small and medium-sized enterprises (SMEs), increased government revenue, and improved fuel access in rural areas are all projected benefits.
The Dangote Refinery unequivocally links this initiative to President Bola Ahmed Tinubu’s “Renewed Hope Agenda,” highlighting it as a “key example of President Bola Tinubu’s bold and reformative economic policies.” The refinery also acknowledged the federal government’s support, particularly through the “Naira-for-Crude scheme,” which it credits with helping to stabilize fuel supply amidst global price volatility.
This pioneering effort marks a significant milestone in Nigeria’s energy sector. While the success of this ambitious undertaking will depend on meticulous execution and sustained commitment, it represents a decisive step towards a more transparent, efficient, and equitable fuel distribution system for all Nigerians.
Registration details: Marketers, petrol dealers, manufacturers, telecom companies, and other key stakeholders are invited to register, with the process including Know Your Customer (KYC) verification.
Contact Information:
Phone: +234 707 470 2099, +234 707 470 2100, +234 816 961 8390, +234 703 796 8308, +234 812 362 2893
Email: sales.enquiry@dangote.com
