Oil marketers have expressed mixed reactions to a new policy announced by the Dangote Petroleum Refinery, requiring advance payments from dealers before accessing petroleum products at its Lekki facility. This development is seen as a significant shift in Nigeria's downstream sector operations.
Gistreel gathered that the announcement was made during a high-level stakeholder meeting chaired by NNPC Group CEO Mele Kyari. The meeting featured notable industry players, including representatives from the Major Oil Marketers Association of Nigeria, Depot and Petroleum Products Marketers Association of Nigeria, and key companies like 11 Plc, Matrix, and AA Rano.
Industry insiders revealed that this advance payment policy diverges sharply from the long-established tradition where marketers could pay for products after delivery to depots. The policy has introduced a layer of complexity, particularly for operators with limited financial capacity.
An anonymous source said, “This upfront payment requirement significantly increases financial stress on marketers, especially those operating with constrained liquidity. For decades, the post-delivery payment model has been the norm, aligning better with our operational cash flow cycles.”
The new policy has sparked heated debates among downstream operators, leading to ongoing negotiations to address the concerns and foster a compromise between stakeholders.
Some marketers have raised apprehensions, pointing out that the policy could disproportionately impact smaller businesses already grappling with tight margins. They argue that such a financial model may create barriers to accessing products for less-capitalized players.
Conversely, others have voiced support for the policy, arguing that it is essential for the smooth operation of the refinery and a necessary step to mitigate risks associated with delayed payments. Proponents believe the advance payment system could ensure operational stability for the newly commissioned refinery.
Speaking in an interview with The PUNCH, Chinedu Ukadike, National Publicity Secretary of the Independent Petroleum Marketers Association of Nigeria, described the advance payment policy as reasonable for a new business aiming to establish its footing in the market.
He remarked, “The Dangote refinery is a newly established entity building a customer base among marketers capable of off-taking high volumes. Independent marketers are eager to engage in high-volume transactions, but due to past practices where credit arrangements were common, we now expect some flexibility to ease the transition.”
He added, “While Dangote is demanding advance payment at this initial stage, I believe that as we build a strong business relationship with the refinery, there may be room to eventually secure products on credit terms. It’s a matter of developing trust and understanding over time.”
The development has continued to generate discussion among industry stakeholders, with expectations that further dialogue will clarify the operational framework and address challenges raised by marketers, especially those from smaller or medium-sized enterprises.
