Marketers differ on advance payments for Dangote petrol

This demand was advanced to marketers during a high-level stakeholder meeting organised by NNPC Group CEO Mele Kyari, representatives of the Major Oil Marketers Association of Nigeria, Depot and Petroleum Products Marketers Association of Nigeria, and key stakeholders from companies such as 11 Plc, Matrix, AA Rano, and the Nigerian Midstream and Downstream Petroleum Regulatory Authority recently in Abuja.

According to sources at the meeting, Dangote insisted on advance payments from marketers, unlike the traditional importation system where marketers settle payments upon product arrival at depots.

The source said, “Paying upfront significantly increases financial pressure on marketers, particularly those with limited capital. For decades, we’ve operated on a post-delivery payment model, which aligns better with our liquidity cycles.”

The contentious issue has been a point of disagreement among downstream operators, as negotiations are still ongoing to reach a mutual understanding.

Commenting on the issue in separate interviews with our correspondent, the marketers expressed varying views.

While some marketers voiced concerns about the financial burden this requirement could impose, particularly on smaller businesses, others defended the policy, arguing that it is a necessary step to ensure the refinery’s operations run smoothly and to mitigate risks associated with delayed payments.

In an interview with The PUNCH, the Independent Petroleum Marketers Association of Nigeria  National Publicity Secretary, Chinedu Ukadike, confirmed that marketers were asked to pay in advance before being allowed to offtake products.

He noted, however, that the reason for the directive was understandable as the refinery is a new establishment and relationships should be formed before such credit facility concessions are granted.

He said, “The Dangote refinery is just newly established and they are building a customer base for those who can offtake high volumes.

“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.”

When asked what the association is doing concerning the situation, he said a special purpose vehicle has been established to provide financing for small, medium, and higher volume off-takers.

He added, “Because of the nature of independent marketers, we are now warehousing small, medium, and higher volume off-takers.

“So that is why we were able to assemble our marketers and establish special purpose vehicles to be able to drive in all the marketers to at least get petroleum products from the new arrangement.

“We have agreed with the advanced payments, and we 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 who spoke on the condition of anonymity stated that conversations on the payment are still ongoing and not concluded.

“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 official said.

On his part, the President of the Petroleum Products Retail Outlet Owners Association of Nigeria, Dr Billy Harry, noted that marketers and the NNPCL have all agreed to stop petrol imports.

He further stated its members are already working to raise the money required.

“At least we have gotten to the point where we have agreed that we are no longer importing fuel. We have agreed that we are not importing. 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.

“We have been getting products on advance payment so it’s not entirely new. It has always been like that. 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.”

https://punchng.com/marketers-differ-on-advance-payments-for-dangote-petrol/