Dangote Petroleum Refinery has warned that continued reliance on coastal logistics for distributing petrol may push pump costs to as excessive as N1,000 per litre if the extra prices are handed on to customers.
The warning was contained in a press release issued by the refinery on Thursday, the place it outlined the associated fee implications of evacuating petroleum merchandise through ships relatively than pipelines or land-based infrastructure.
In line with the corporate, whereas entrepreneurs are free to decide on their most well-liked evacuation technique, coastal logistics comes with vital price burdens that might undermine latest positive factors from native refining.
The refinery stated the difficulty has broader implications for gasoline affordability, client welfare, and Nigeria’s vitality price construction, significantly amid efforts to stabilise costs via elevated home provide.
What Dangote Refinery is saying
Dangote Refinery says coastal logistics considerably elevate the price of distributing petroleum merchandise and will erode the worth advantages of native refining if adopted at scale.
- “Coastal logistics can add about N75 per litre to petrol prices, doubtlessly pushing PMS pump costs to N1,000 per litre if handed on to the customers.”
- “Nigeria’s each day consumption averages of about 50 million litres of PMS and 14 million litres of diesel. Reliance on coastal logistics may impose a further annual price of roughly N1.752 trillion,” the refinery stated
The refinery stated these prices would in the end be borne by both producers or customers.
The corporate urged entrepreneurs and policymakers to prioritise logistics options that help value stability and shield finish customers.
Extra insights
Coastal logistics entails transporting petroleum merchandise by sea alongside Nigeria’s shoreline, relatively than via pipelines or direct truck loading from refineries, a course of Dangote Refinery says introduces avoidable prices.
- These prices come up from port expenses, maritime levies, vessel-related bills, and different charges that don’t immediately profit customers.
- Dangote Refinery maintains that gantry-based truck loading stays probably the most cost-efficient evacuation technique.
- The corporate stated its gantry infrastructure eliminates a number of layers of logistics bills related to marine transportation.
In line with the refinery, inefficient evacuation decisions may reverse the positive factors achieved from elevated native refining capability.
Backstory
Nigeria has traditionally relied on imported refined petroleum merchandise as a consequence of restricted home refining capability, exposing the financial system to international trade stress and world value volatility.
- The beginning of operations on the Dangote Refinery marked a serious shift towards native refining and lowered dependence on imports.
- Elevated home provide has helped average gasoline costs and stabilise market dynamics.
- Nonetheless, distribution infrastructure has emerged as a brand new stress level, with logistics prices now enjoying a rising function in pump value outcomes.
Dangote Refinery argues that with out complementary investments in environment friendly evacuation infrastructure, the total advantages of native refining will not be realised.
- Dangote Refinery added that native refining has already contributed to vital value 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 stated elevated home provide has additionally lowered gasoline imports, eased international trade stress, and supported market stability, contributing to a stronger naira at about N1,385 per greenback.
- Dangote Refinery says it has invested closely in infrastructure to help cost-efficient gasoline distribution throughout the nation.
The corporate operates a gantry facility with 91 loading bays able to dispatching as much as 2,900 tankers each day.
It described gantry loading as probably the most environment friendly evacuation technique as a result of it avoids port-related and maritime expenses.
The refinery renewed requires coordinated funding in pipeline infrastructure nationwide to additional cut back distribution prices.
What it’s best to know
In January, the Dangote Refinery insisted that it’ll proceed to function at full capability whereas supplying over 50 million litres of petrol each day to the Nigerian market.
The Lagos-based 650,000 barrels-per-day facility stated manufacturing stays steady and uninterrupted.
In October, the Refinery introduced plans to increase its manufacturing capability from 650,000 barrels per day to 1.4 million barrels per day.
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