The Dangote Petroleum Refinery’s plan to bypass traditional fuel distribution channels and supply products directly to end-users has sparked a wave of opposition across Nigeria’s downstream petroleum sector, with marketers warning of massive job losses, market disruption, and looming fuel price hikes.

Speaking during its Annual General Meeting in Abuja, the Natural Oil and Gas Suppliers Association of Nigeria (NOGASA) said the refinery’s model which involves deploying 4,000 Compressed Natural Gas (CNG)-powered trucks to deliver petrol and diesel directly to consumers could destabilise the national supply chain and threaten the survival of thousands of businesses.

NOGASA: “This Could Collapse the Sector”

NOGASA’s National President, Bennett Korie, expressed concern over the vertical integration of refining, distribution, and retailing by a single operator.

“This is the same strategy that led to the collapse of NNPC refineries. Dangote cannot be allowed to refine, distribute, and retail on its own,” Korie said.

He warned that more than 50,000 filling stations and thousands of jobs are at stake, urging President Bola Tinubu to intervene before the plan is implemented.

“We supported the Dangote Refinery project from the beginning, but this direct distribution model is dangerous and unsustainable,” he added.

Retailers, Depot Owners Raise Alarm

The warning was echoed by Billy Gillis-Harry, National President of the Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN), who said the proposed model could create a monopolistic market similar to the country’s cement industry.

“We are already buying petrol at N815 per litre. The way things are going, we may soon see pump prices cross N900. This plan could worsen the situation,” Gillis-Harry said.

He noted that independent retailers are already incurring losses of up to N80 per litre, and warned that the sector may soon be forced to cut salaries or lay off workers.

Dangote Group Defends Plan

A senior official of the Dangote Group, who declined to be named, defended the company’s decision, describing it as a cost-cutting innovation aimed at stabilising the market.

“We are bearing the logistics costs to make fuel cheaper for Nigerians. This is about efficiency, not monopoly,” the official said.

He dismissed concerns of domination, arguing that the proposed 4,000 trucks are insufficient to serve the entire country.

“There are over 700 local governments in Nigeria. Our trucks can’t cover all of them. There’s still room for everyone in this industry,” he said.

Fuel Prices Spike Amid Supply Disruption

Despite assurances, market conditions worsened on Thursday as Dangote abruptly suspended sales of Premium Motor Spirit (PMS) at its depots. In an internal memo to marketers, the company directed an immediate halt to new payments for PMS pending a review of its pricing framework.

The development triggered a sharp rise in depot prices, with PMS now selling for N870 per litre, up from N815, signaling possible nationwide pump price increases in the coming days.

Sources in the industry attributed the hike to a combination of rising crude oil prices, exchange rate volatility, and uncertainty surrounding Dangote’s new distribution approach.

Call for Government Intervention

As tension builds, stakeholders are urging the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) and the Ministry of Petroleum Resources to step in.

“This is no longer just a business decision; it’s a national concern. We need policies that protect both innovation and competition,” said Korie.

Industry observers say the situation underscores the challenge of balancing energy innovation with market stability in Nigeria’s complex fuel economy.

What’s at Stake?

The Dangote Refinery Africa’s largest boasts a refining capacity of 650,000 barrels per day, with potential to significantly reduce Nigeria’s dependence on fuel imports. However, stakeholders say its success must not come at the expense of local operators, supply chain resilience, and consumer affordability.

While the refinery is expected to begin full-scale nationwide distribution by August 15, pressure is mounting on federal authorities to mediate between Dangote and other stakeholders to avoid a potential fuel crisis.