Oil marketers have expressed mixed reactions to the recent demand from Dangote Petroleum Refinery, which requires dealers to make advance payments before they can begin off-taking products from the Lekki-based refinery.
This demand was presented to marketers during a high-level stakeholder meeting organized by NNPC Group CEO Mele Kyari, with representatives from the Major Oil Marketers Association of Nigeria, Depot and Petroleum Products Marketers Association of Nigeria, and key stakeholders from companies such as 11 Plc, Matrix, AA Rano, and the Nigerian Midstream and Downstream Petroleum Regulatory Authority, held recently in Abuja.
According to sources at the meeting, Dangote insisted on advance payments, deviating from the traditional practice where marketers pay upon product arrival at depots.
One source stated, “Upfront payments place significant financial pressure on marketers, especially those with limited capital. For years, we’ve operated on a post-delivery payment model, which suits our liquidity cycles better.”
The issue has sparked considerable debate among downstream operators, with negotiations continuing to reach a resolution.
In separate interviews with our correspondent, marketers voiced differing opinions. Some expressed concerns about the financial burden this policy could impose, particularly on smaller businesses, while others defended it as a necessary step to ensure the refinery’s smooth operation and to address risks linked to delayed payments.
Chinedu Ukadike, National Publicity Secretary of the Independent Petroleum Marketers Association of Nigeria, confirmed that marketers are being asked to pay in advance before receiving products from the refinery. He explained that this request is understandable, given that the refinery is a new establishment, and relationships need to be developed before credit facilities can be offered.
Ukadike said, “The Dangote refinery is new, and they are working to build a customer base for those who can take large volumes. Independent marketers are willing to take higher volumes, but we also want to maintain the option of paying later, as we have done in the past. Since Dangote is still building its business, we expect that over time, we will be able to establish a relationship with them and receive products on credit.”
He also mentioned that the association has set up a special purpose vehicle to help finance small, medium, and high-volume off-takers. “We’ve established this vehicle to ensure that we can get petroleum products from this new arrangement. We’re working with financial stakeholders and our marketers to secure the necessary funds and ensure a steady supply.”
Another anonymous marketer stated that discussions about advance payments are still ongoing and have not yet been finalized. “These are confidential business matters. Everyone knows that if you want to buy the product, you have to pay upfront, but the specifics are still part of our ongoing discussions.”
Dr. Billy Harry, President of the Petroleum Products Retail Outlet Owners Association of Nigeria, emphasized that marketers and NNPCL have agreed to halt petrol imports. He added that members are already working on raising the required funds for the new system.
“We’ve reached the point where we’ve agreed not to import fuel anymore. The focus now is on stabilizing the business, and we encourage patience as NNPCL, Dangote, and NMDPRA continue their efforts. We’ve been paying in advance for products, so this is not entirely new. That’s why we requested an N100 billion intervention fund to help with bank charges. We’re optimistic that these discussions will ultimately be successful,” he said.
