Dangote Petroleum Refinery has warned that continued reliance on coastal logistics for distributing petrol could push pump prices to as high as N1,000 per litre if the additional costs are passed on to consumers.
The warning was contained in a statement issued by the refinery on Thursday, where it outlined the cost implications of evacuating petroleum products via ships rather than pipelines or land-based infrastructure.
According to the company, while marketers are free to choose their preferred evacuation method, coastal logistics comes with significant cost burdens that could undermine recent gains from local refining.
The refinery said the issue has broader implications for fuel affordability, consumer welfare, and Nigeria’s energy cost structure, particularly amid efforts to stabilise prices through increased domestic supply.
What Dangote Refinery is saying
Dangote Refinery says coastal logistics significantly raise the cost of distributing petroleum products and could erode the price benefits of local refining if adopted at scale.
- “Coastal logistics can add about N75 per litre to petrol costs, potentially pushing PMS pump prices to N1,000 per litre if passed on to the consumers.”
- “Nigeria’s daily consumption averages of about 50 million litres of PMS and 14 million litres of diesel. Reliance on coastal logistics could impose an additional annual cost of approximately N1.752 trillion,” the refinery said
The refinery said these costs would ultimately be borne by either producers or consumers.
The company urged marketers and policymakers to prioritise logistics solutions that support price stability and protect end users.
More insights
Coastal logistics involves transporting petroleum products by sea along Nigeria’s coastline, rather than through pipelines or direct truck loading from refineries, a process Dangote Refinery says introduces avoidable costs.
- These costs arise from port charges, maritime levies, vessel-related expenses, and other fees that do not directly benefit consumers.
- Dangote Refinery maintains that gantry-based truck loading remains the most cost-efficient evacuation method.
- The company said its gantry infrastructure eliminates several layers of logistics expenses associated with marine transportation.
According to the refinery, inefficient evacuation choices could reverse the gains achieved from increased local refining capacity.
Backstory
Nigeria has historically relied on imported refined petroleum products due to limited domestic refining capacity, exposing the economy to foreign exchange pressure and global price volatility.
- The start of operations at the Dangote Refinery marked a major shift toward local refining and reduced dependence on imports.
- Increased domestic supply has helped moderate fuel prices and stabilise market dynamics.
- However, distribution infrastructure has emerged as a new pressure point, with logistics costs now playing a growing role in pump price outcomes.
Dangote Refinery argues that without complementary investments in efficient evacuation infrastructure, the full benefits of local refining may not be realised.
- Dangote Refinery added that local refining has already contributed to significant price reductions, with diesel falling from about N1,700 to N980–990 per litre and PMS declining from about N1,250 to between N839 and N900 per litre.
- It said increased domestic supply has also reduced fuel imports, eased foreign exchange pressure, and supported market stability, contributing to a stronger naira at about N1,385 per dollar.
- Dangote Refinery says it has invested heavily in infrastructure to support cost-efficient fuel distribution across the country.
The company operates a gantry facility with 91 loading bays capable of dispatching up to 2,900 tankers daily.
It described gantry loading as the most efficient evacuation method because it avoids port-related and maritime charges.
The refinery renewed calls for coordinated investment in pipeline infrastructure nationwide to further reduce distribution costs.
What you should know
In January, the Dangote Refinery insisted that it will continue to operate at full capacity while supplying over 50 million litres of petrol daily to the Nigerian market.
The Lagos-based 650,000 barrels-per-day facility said production remains stable and uninterrupted.
In October, the Refinery announced plans to expand its production capacity from 650,000 barrels per day to 1.4 million barrels per day.
