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Surge in demand as oil marketers pursue Dangote Refinery's bulk-purchase agreement for price stability

POSTED ON January 17, 2025 •   Breaking News      BY Abiodun Saheed Omodara
Dangote Refinery, Independent Petroleum Marketers Association (IPMAN)and Fuel Nozzle

NIGERIA- Enticed by the incentives of the bulk-purchase agreement offered by the Dangote Petroleum Refinery, an increasing number of oil marketers in Nigeria are vying to be included as beneficiaries of this arrangement. 

The marketers believe that the bulk-purchase agreement ensures price stability, unlike purchases from depot owners whose prices are subject to frequent increases, as recently announced.

It is noteworthy that two major players in Nigeria’s downstream oil and gas sector – Ardova Plc and Heyden Petroleum – have already entered into a bulk purchase agreement with the Dangote Petroleum Refinery, following MRS; a move that has allowed them to sell petroleum at significantly lower pump prices.

Recently, depot owners raised their loading price from N909 to N950 per litre, citing a rise in crude oil prices in the international market, which has compelled many independent marketers to adjust their pump prices accordingly.

Independent marketers are highlighting the advantages of the bulk-purchase agreement with Dangote Refinery, which is currently benefiting the three leading oil marketers, MRS, Ardova Plc, and Heyden, who have signed the agreement and are able to maintain lower pump prices.

The National President of the Independent Petroleum Marketers Association (IPMAN), Alhaji Abubakar Maigandi Garima, confirmed that association members are keen to partner with Dangote Refinery and have been encouraged to organize themselves to pool resources to qualify for the bulk-purchase agreement.

In support of IPMAN’s new stance, he stated that members could no longer rely on depot owners for products when they can purchase directly from the refinery, considering that the minimum order from Dangote Refinery is two million litres at N909 per litre.

The management of Dangote Refinery, referencing the economic relief provided by President Bola Ahmed Tinubu’s crude-for-naira swap initiative, announced bulk-purchase incentives to the three leading operators in the downstream sector to help Nigerians enjoy reduced pump prices.

As MRS, Ardova Plc, and Heyden engaged in this arrangement, other petroleum marketers flocked to the Refinery in Ibeju-Lekki, Lagos, seeking to join the bulk purchase deal, which promises a consistent supply of petroleum products at competitive prices.

The eagerness to participate in the bulk-purchase agreement is reportedly fueled by positive feedback from motorists who have praised the fuel sourced from Dangote Refinery, sold at MRS stations, for its superior burn rate compared to imported products.

Dangote Refinery stated that this strategic initiative aims to further stabilize the nation’s fuel market and enhance energy security for consumers by ensuring a steady supply of petroleum products at affordable prices.

The bulk purchase agreement incentives provided to Ardova and Heyden coincided with a reduction in petrol prices by MRS Oil Nigeria Plc, which had previously entered into a similar agreement with Dangote Refinery.

Consequently, MRS Oil reduced its fuel prices to N935 per litre across all its stations nationwide, addressing the persistent issue of price discrepancies among states. Additionally, MRS Oil’s stock recently reached a new 52-week high, as investor confidence in the company’s future earnings prospects grew.

Reports suggest that the bulk purchase agreement with Dangote Petroleum Refinery has also allowed Ardova and Heyden to secure a dependable and consistent supply of petroleum products from the world’s largest single-train refinery at competitive prices, benefiting consumers nationwide.

This arrangement guarantees that Ardova and Heyden will have access to a comprehensive range of refined products, thereby ensuring a reliable supply chain for their operations.

Other petroleum marketers are reportedly eager to sign similar agreements with Dangote Refinery as soon as they are permitted, especially since many of them have a majority of their filling stations located in Lagos, close to the refinery.

After finalizing the agreement, Ardova Plc emphasized the significance of this partnership in promoting a more competitive landscape within Nigeria’s downstream oil and gas sector.

The collaboration with Dangote Refinery is expected to positively transform Nigeria’s oil and gas market. By ensuring a stable and affordable supply of fuel products across over 1,000 retail outlets of the two companies, the agreement aims to mitigate the ongoing issue of fuel scarcity that has long affected Nigeria.

 

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