Emmanuel OchayiRefinery’s Advance Payment Policy Sparks Debate
Oil marketers in Nigeria have shared diverse opinions on the recent directive from Dangote Refinery requiring advance payment before marketers can offtake petroleum products. This demand departs from the conventional post-delivery payment system previously common in the industry.
During a stakeholder meeting organised by the Nigerian National Petroleum Corporation Limited (NNPCL) in Abuja, attended by officials from the Major Oil Marketers Association of Nigeria (MOMAN), Depot and Petroleum Products Marketers Association of Nigeria (DAPPMA), and representatives of other industry stakeholders, Dangote Refinery insisted on the new payment model.
Join our WhatsApp ChannelAccording to a source present, the advance payment model was described as a measure to ensure operational efficiency. “Paying upfront significantly increases financial pressure on marketers, especially those with limited capital,” the source explained.
Industry Players React to the Policy
The policy has drawn mixed reactions. While some marketers view it as burdensome, others argue that it is necessary for the refinery’s sustainability.
Chinedu Ukadike, the National Publicity Secretary of the Independent Petroleum Marketers Association of Nigeria (IPMAN), acknowledged the rationale behind the directive. “The Dangote Refinery is newly established and building relationships. Advance payments help them identify credible buyers. Over time, we expect credit facilities will be introduced,” Ukadike stated.
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He also highlighted efforts by marketers to adapt to the new policy. “We have created special purpose vehicles to support small and medium marketers in raising funds. This ensures they can participate in the new system effectively,” he added.
Smaller Marketers Raise Concerns
Not all marketers are convinced. A marketer who spoke anonymously emphasised the financial strain the advance payment requirement places on smaller businesses. “These negotiations are ongoing, and the final decision isn’t set in stone yet,” the marketer said.
Dr. Billy Harry, President of the Petroleum Products Retail Outlet Owners Association of Nigeria (PETROAN), shared insights into how his organisation is addressing the challenge. “We’ve agreed on the need to stop petrol imports and focus on domestic production. But funding remains a significant hurdle, which is why we requested a N100 billion intervention fund to cushion bank charges and other financial burdens,” Harry explained.
NNPCL and Dangote: A Shift in Nigeria’s Energy Landscape
The Dangote Refinery’s move comes as Nigeria seeks to end its reliance on imported petroleum products. Stakeholders, including NNPCL and regulatory authorities, have expressed confidence that domestic refining will stabilise the downstream sector.
“Marketers are adjusting to this system. While advance payments are not entirely new, it’s about finding a balance that works for everyone involved,” Harry added.
Looking Ahead
While discussions on the advance payment policy continue, industry players remain optimistic about the long-term benefits of the Dangote Refinery’s operations. As negotiations progress, both marketers and the refinery aim to develop a framework that addresses operational needs and supports smaller businesses.
Ukadike concluded with a hopeful outlook: “This is an evolving relationship. With time, we believe there will be more flexibility for marketers and greater efficiency for the refinery.”
Emmanuel Ochayi is a journalist. He is a graduate of the University of Lagos, School of first choice and the nations pride. Emmanuel is keen on exploring writing angles in different areas, including Business, climate change, politics, Education, and others.
