Oil marketers have expressed mixed reactions to a recent directive from the Dangote Petroleum Refinery requiring advance payments before marketers can offtake products from its Lekki-based facility.
This directive emerged during a high-level meeting convened by NNPC Group CEO Mele Kyari, which included representatives from the Major Oil Marketers Association of Nigeria, the Depot and Petroleum Products Marketers Association of Nigeria, and companies such as 11 Plc, Matrix, and AA Rano.
Officials from the Nigerian Midstream and Downstream Petroleum Regulatory Authority were also in attendance.
Sources at the meeting revealed that Dangote’s insistence on upfront payments marks a departure from the traditional model, where marketers make payments after products arrive at depots.
This shift has sparked concerns among marketers, especially those with limited capital, who fear it may strain their liquidity.
“Paying upfront significantly increases financial pressure on marketers, particularly those with limited capital,” a source explained. “For decades, we’ve operated on a post-delivery payment model, which aligns better with our liquidity cycles.”
Opinions remain divided among stakeholders. While some view the requirement as a financial burden, particularly for smaller businesses, others believe it is a necessary measure to ensure smooth operations and mitigate risks associated with delayed payments.
In an interview with The PUNCH, National Publicity Secretary of the Independent Petroleum Marketers Association of Nigeria, Chinedu Ukadike, confirmed the refinery’s demand for advance payments.
He acknowledged the rationale behind the directive, emphasizing that Dangote’s refinery is still in its early stages and needs to build trust with customers before extending credit facilities.
“The Dangote refinery is just newly established and they are building a customer base for those who can offtake high volumes,” Ukadike noted. “Independent marketers are ready to offtake higher volumes, but because of some of the largesse we have been receiving before, we also want somewhere we can be getting the products and maybe pay later. Dangote is demanding advance payment, but since it’s just an expanding business, I know that with time, when we create a relationship with Dangote, we will be able to get products on credit.”
To address the situation, Ukadike disclosed that a special purpose vehicle (SPV) has been created to provide financial support for marketers.
“We are now warehousing small, medium, and higher volume off-takers,” he added. “We have agreed with the advanced payments and are making necessary contacts with financial stakeholders and some of our marketers to ensure that we can get products. I believe that with time, we will start getting concessions and other minimal support in terms of logistics.”
Another marketer, speaking anonymously, confirmed that discussions on the payment structure are ongoing.
“Those are subject to private, confidential businesses. Everybody knows that if you want to buy the product, you have to pay, but we can’t discuss that now. Those are still part of the issues that we need to thrash in our discussions and things we want to talk about but not now. Let us conclude the negotiations on all sides,” the marketer stated.
President of the Petroleum Products Retail Outlet Owners Association of Nigeria,,Dr. Billy Harry, expressed optimism about the discussions. He confirmed that stakeholders, including the NNPCL, have agreed to halt petrol imports and focus on local sourcing.
“At least we have gotten to the point where we have agreed that we are no longer importing fuel,” Harry said. “Every other thing that would make the business stable is what PETROAN is after and pursuing. We encourage all stakeholders and Nigerians to be patient with what NNPCL, Dangote, and the NMDPRA are doing.”
Harry added that many marketers are working to secure funding from banks to meet the new payment terms. “We have been getting products on advance payment, so it’s not entirely new. And that was why we asked for N100bn intervention funds. That would help in cushioning the effect of bank charges. Today, most of us are working assiduously to get money from banks that won’t charge us for transactions and different things. That’s where we are. We are positive the discussion will end well,” he concluded.
