Oil marketers have expressed mixed reactions to Dangote Petroleum Refinery’s recent directive requiring advance payments before dealers can begin off-taking products from the Lekki-based refinery. This policy shift was unveiled during a high-level stakeholder meeting in Abuja, attended by NNPC Group CEO Mele Kyari, representatives of the Major Oil Marketers Association of Nigeria (MOMAN), Depot and Petroleum Products Marketers Association of Nigeria (DAPPMAN), and other industry players such as 11 Plc, Matrix, and AA Rano.

Unlike the traditional post-delivery payment model, the refinery insists that marketers make upfront payments, citing operational stability and financial security as key reasons for the move. Sources at the meeting highlighted concerns about the financial strain this might place on marketers, particularly smaller businesses. One insider stated, “Paying upfront significantly increases financial pressure on marketers, particularly those with limited capital. For decades, we’ve operated on a post-delivery payment model, which aligns better with our liquidity cycles.”

Mixed Reactions Among Marketers

The new policy has sparked diverse opinions across the downstream oil sector. Speaking to The PUNCH, Chinedu Ukadike, National Publicity Secretary of the Independent Petroleum Marketers Association of Nigeria (IPMAN), acknowledged the refinery’s reasoning behind the directive. “The Dangote refinery is just newly established and is building a customer base for those who can offtake high volumes. Relationships need to be formed before credit facilities can be granted,” he explained.

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Ukadike also revealed that independent marketers are exploring special purpose vehicles (SPVs) to pool resources and secure financing for high-volume purchases. “We have agreed with the advance payments, and we are making necessary contacts with financial stakeholders to ensure that marketers can get products. Over time, I believe we’ll start receiving concessions and other forms of support,” he added.

Ongoing Negotiations

While some marketers have accepted the terms, others are cautious, emphasizing the need for further discussions. A marketer who requested anonymity remarked, “Conversations on the payment model are still ongoing. These are private, confidential business matters that need to be resolved before finalizing agreements.”

Dr. Billy Harry, President of the Petroleum Products Retail Outlet Owners Association of Nigeria (PETROAN), stated that members are actively working to raise the required funds. He reassured stakeholders that the payment model is not entirely new, as advance payments have been part of previous practices. However, he emphasized the need for intervention funds to ease financial burdens, such as high bank charges.

“We are positive that discussions will end well,” Harry said. “At least we’ve agreed to stop fuel imports, which is a significant step forward. The focus now is ensuring that the transition to domestic production remains stable and beneficial to all stakeholders.”