The start of direct petrol supplies from the Dangote Petroleum Refinery has triggered a seismic shift in Nigeria’s downstream petroleum sector, threatening to displace long-standing businesses and associations that have dominated the value chain for decades.
From depot owners and petrol importers to state refineries and labour unions such as the Nigeria Union of Petroleum and Natural Gas Workers (NUPENG), the $20 billion mega refinery is forcing a realignment of power and relevance in the industry.
Industry analysts say the refinery’s decision to bypass traditional supply channels and sell petrol directly to marketers, bulk customers, and international buyers is rapidly dismantling the complex ecosystem of intermediaries that thrived when Nigeria depended almost entirely on imported fuel.
New order in petrol supply
Built to process 650,000 barrels of crude per day, the Dangote complex has the capacity to meet Nigeria’s entire domestic petrol demand, with surplus volumes destined for export markets in Africa, Europe, and the United States.
Aliko Dangote, president of Dangote Industries, has described the refinery as a solution to Nigeria’s five-decade struggle with fuel shortages, promising cheaper, cleaner, and more reliable supplies.
But the scale of the facility, combined with Dangote’s decision to distribute products using its own logistics fleet, including some 4,000 compressed-natural-gas (CNG) powered tankers, means fewer middlemen are needed to bridge refinery-to-retail sales.
The implications are already being felt. BusinessDay reported this week that several private depots in Lagos and neighbouring states have recorded skeletal or zero operations as marketers bypass them to lift petrol directly from Dangote’s complex in Lekki.
Depot owners
Private depot owners, also known as Depot and Petroleum Products Marketers Association of Nigeria (DAPPMAN), many of whom invested billions of naira in jetties, storage tanks, and pipeline connections during the import-dependent years, now face the prospect of stranded assets.
“These depots were built on the back of Nigeria’s heavy reliance on imported fuel,” a downstream operator, who asked not to be named, told this newspaper. “Now that Dangote is cutting them out of the equation, the revenue streams are drying up.”
The fear is that assets financed through bank loans could quickly turn into liabilities, triggering a wave of debt defaults unless depot operators find new roles in the energy chain.
Read also: Dangote refinery halts self-collection of petroleum products
N1.5trn subsidy demand
On Thursday, Dangote Refinery said the ongoing dispute with DAPPMAN stems from the latter’s demand for an annual subsidy of N1.505 trillion to enable members to match the refinery’s gantry prices at their own depots.
In a statement signed by its management, the company alleged the association is demanding a subsidy to cover additional logistics costs tied to transporting products from the refinery to their depots via coastal logistics, which would add N75 per litre to fuel costs.
The refinery noted that the association effectively asked it to absorb the cost or pass it on to consumers.
It explained that based on projected daily consumption volumes of 40 million litres of petrol and 15 million litres of Automotive Gas Oil (AGO), this amounts to an additional annual cost of N1.505 trillion (N1,505,625,000,000), “which they are effectively asking us to absorb and pass it on to consumers.”
Importers pushed to the margins
The losers are not limited to depot owners. Fuel importers, who for decades thrived by navigating Nigeria’s subsidy regime and foreign exchange (FX) bottlenecks, have been virtually shut out of the market.
Since the refinery began domestic petrol sales, the Nigerian National Petroleum Company (NNPC) has scaled back its imports, while private importers—once crucial to bridging supply shortfalls- have little incentive to bring in cargoes at global prices.
Dangote’s exports of petrol to the United States and West Africa have also underscored its ability to compete internationally, making it harder for Nigerian importers to find profitable niches.
Sector players warn of disruption
Billy Gillis-Harry, president of the Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN), has warned that while the refinery is a welcome national asset, its move into direct retailing risks destabilising the downstream sector.
Speaking in a phone interview with BusinessDay, Gillis-Harry argued that existing depots, truck operators, and support firms could be sidelined in ways that damage the broader economy.
According to him, Nigeria currently relies on about 30,000 trucks for nationwide fuel distribution. Dangote’s plan to deploy between 4,000 and 10,000 CNG-powered trucks may not be sufficient to replace the current fleet.
“There is no magic that can make you load 10,000 trucks from a single source,” he said. “Centralising distribution like this risks severe bottlenecks, delays in fuel delivery, and job losses for thousands of drivers and mechanics.”
“If the process becomes too difficult, the consequences for Nigerians will be very harsh,” he warned.
State refineries in shadows
Another casualty of Dangote’s rise could be Nigeria’s state-owned refineries in Warri, Kaduna, and Port Harcourt, which have struggled for decades to operate efficiently.
Even with rehabilitation efforts underway, industry experts doubt they can compete on cost or scale with the private mega-refinery.
“The government has to decide whether to pour more money into state refineries that may never break even, or to repurpose them for other uses,” said an energy economist at a Lagos-based think tank. “Dangote has effectively set a new benchmark.”
Logistics companies
Beyond depots and importers, Dangote’s decision to operate its own truck fleet is reshaping the market for fuel haulage.
Third-party tanker operators, whose businesses were built on moving imported products from ports to depots and then to filling stations, now face declining demand.
While Dangote argues its CNG fleet will create jobs for drivers and mechanics, the net effect depends on how much transport work it keeps in-house versus outsourcing.
Already, some haulage companies are reporting contract cancellations. “The volumes we used to move have collapsed,” Adewale Adeboye, a truck owner in Ogun State, told this newspaper. “We don’t know how long we can survive.”
Labour unions brace for change
Labour unions, particularly NUPENG, are also in the line of fire.
The union recently clashed with Dangote over the hiring of drivers for the new CNG truck fleet. NUPENG accused the company of undermining collective bargaining rights and trying to bypass established labour structures.
Although Dangote insisted it recognised union rights, the standoff led to threats of strike action and brief shutdowns in distribution earlier this month.
Union leaders fear that direct hiring and tighter control over distribution could weaken their bargaining power and reduce opportunities for members employed in depot operations and independent trucking firms.
At a press conference in Lagos, Aliko Dangote, chairman of the Dangote Group, put to rest the notion that his plan to have 4000 in-house CNG trucks would lead to job losses.
“So these trucks they are fighting about, will create 24,000 jobs,” he said.
He said his truck drivers could apply for housing loans after five years of driving without accidents.
“Our drivers earn more than graduates. If you look at what they earn a month, it’s almost four times the minimum wage,” he added.
Going by the face value of Nigeria’s current minimum wage, which sits at N70,000 per month ($46.84), a Dangote truck driver, according to Africa’s richest man, would be earning anywhere from N210,000 to N280,000.
Associations reacts
Benneth Korie, president of Natural Oil & Gas Suppliers Association of Nigeria (NOGASA), in an earlier engagement had decried the refinery’s move, stating that it would result in job losses that could jeopardise the livelihoods of those involved across the distribution value chain.
He stressed that as suppliers of petroleum products, the association remained committed to protecting businesses while serving the nation’s interests.
Also, Yusuf Othman, national president of the Nigerian Association of Road Transport Owners (NARTO), stated that the organisation does not accept the plan for free distribution of petroleum products, even though it appreciates the injection of new trucks and other investments into the petroleum distribution value chain.
Othman said that such an approach is not only unsustainable but also a deliberate attempt to undermine and eliminate the thousands of independent transporters who form the backbone of Nigeria’s petroleum distribution network.
“At present, NARTO members collectively operate more than 30,000 trucks across the country, employing thousands of drivers, assistants, and service providers. These operations sustain millions of dependents and are supported by financial commitments from both local and international banks, as well as marketers and depot owners,” NARTO posited.
