Dangote refinery has registered about a thousand fuel import marketers
As of late 2025, the Dangote Petroleum Refinery has significantly expanded its distribution network by registering thousands of marketers through major industry associations and direct agreements.
Key Registered Marketing Groups
Rather than just registering individual "import marketers," the refinery has integrated the three most prominent petroleum associations in Nigeria, which together control approximately 75% of the domestic market:
IPMAN: The Independent Petroleum Marketers Association of Nigeria, which represents over 30,000 members and 150,000 service stations, has directed its members to register and source directly from the refinery.
MEMAN (formerly MOMAN): The Major Energies Marketers Association of Nigeria, whose members (including TotalEnergies, Conoil, and Ardova) have collectively registered to lift products.
DAPPMAN: The Depot and Petroleum Products Marketers Association of Nigeria has also been registered as a primary distributor.
Direct Distribution and Incentives
To streamline operations and reduce reliance on imports, the refinery has introduced several 2025 initiatives:
Price Reductions: In December 2025, the refinery slashed its gantry price to ₦699 per litre to incentivize local patronage over imports.
Credit Facilities: A 10-day credit facility (backed by bank guarantees) is available for petrol station owners and dealers.
Logistics Support: Dangote has deployed a fleet of 4,000 CNG-powered trucks to provide free direct delivery to registered marketers across the country.
Retail Reach: Major partners like MRS Oil, Ardova Plc, and Heyden Petroleum have secured bulk purchase agreements to supply over 1,000 retail outlets.
While many marketers have transitioned to local sourcing, some tension remains; as of mid-2025, data showed that nearly 71% of Nigeria's daily petrol consumption was still being met through imports, though the refinery is actively working to displace this volume with its 1.5 billion litre monthly supply capacity.
draft business plan feasibility study and proforma financial reports of Midland Cosmos oil and gas trying to secure Ten million liters of fuel from Dangote refinery how much revenue profiting for bank guarranteed provided by the refinery
A business plan for "Midland Cosmos Oil and Gas" to secure ten million liters of fuel from the Dangote Refinery involves a direct purchase, likely on credit backed by a bank guarantee. As of late December 2025, the gantry price is ₦699 per litre, suggesting a potential revenue of approximately ₦8.41 billion and a gross profit of around ₦1.42 billion from the sale of the 10 million liters.
Business Plan and Feasibility Study Outline
For a bank guarantee and registration, Midland Cosmos must provide several documents.
The feasibility study should address market viability, given the current competitive landscape where the Dangote Refinery is absorbing logistics costs to disrupt depot pricing. The 10-day credit facility with bank guarantees mitigates payment risk for the refinery while easing cash flow pressure for marketers like Midland Cosmos.
Pro Forma Financial Report (10 Million Liters PMS)
The following pro forma assumes a direct purchase from Dangote Refinery at the current gantry price and an average retail pump price based on current market conditions, including the benefit of free logistics offered by Dangote's CNG truck fleet.
Metric Amount (₦) Notes
Total Volume 10,000,000 liters User specified volume
Cost per Litre (Gantry Price) ₦699 Dangote Refinery price as of Dec 2025
Total Cost of Goods Sold ₦6,990,000,000 (10M Liters * ₦699/Litre)
Estimated Avg. Retail Price per Litre ₦841 Average pump price in Lagos/South-West, incl. free logistics
Total Estimated Revenue ₦8,410,000,000 (10M Liters * ₦841/Litre)
Gross Profit ₦1,420,000,000 (Revenue - COGS)
Estimated Gross Profit Margin 16.88% (Gross Profit / Revenue)
Impact of the Bank Guarantee
The bank guarantee primarily facilitates the 10-day credit facility, allowing Midland Cosmos to receive the fuel and generate sales revenue before the payment to the refinery is due. This enhances the marketer's cash flow and reduces the initial working capital requirement. The guarantee itself does not directly affect the revenue or profit figures, but it underpins the operational ability to secure the product volume and benefit from the competitive pricing structure.
Company Registration: Certificate of Incorporation from the Corporate Affairs Commission (CAC) and operational licenses.
Financial Standing: A bank reference letter, Tax Clearance Certificate, Tax Identification Number (TIN), and three years of audited accounts.
Operational Plan: Identification of business owner(s) and representatives, and a detailed plan for logistics, distribution, and retail outlets to handle the large volume (10 million liters is roughly 300-400 tanker trucks).
continue
Continued Business Plan and Financial Analysis
Here is a continuation of the business plan, focusing on operational costs and a detailed pro forma income statement for Midland Cosmos Oil and Gas.
Midland Cosmos benefits significantly from the current market dynamics driven by the Dangote Refinery. The refinery's offer of free logistics via its 4,000 CNG-powered trucks substantially reduces one of the primary operational hurdles and costs for marketers in Nigeria.
Logistics: The major cost of haulage is eliminated. Midland Cosmos will primarily manage local delivery from drop-off points to its retail outlets and general overhead.
Pricing Strategy: The retail price of ₦841 per litre is competitive within the current market, where prices at different stations range from ₦739 (at partner stations like MRS) to over ₦900 per litre at others.
Competition: Intense competition is a factor, but the high demand for fuel (over 50 million litres consumed daily nationwide) ensures market absorption for the 10 million liters.
Risk Mitigation: The 10-day credit facility backed by a bank guarantee allows for sales generation before the supplier payment is due, improving cash flow and reducing working capital risk.
Detailed Pro Forma Income Statement (Single 10 Million Litre Transaction)
This pro forma statement details the estimated expenses and net profit for a single transaction cycle (approximately 10 days) involving the sale of 10 million litres of Premium Motor Spirit (PMS).
Key Insights on Profitability
Profit Drivers: The substantial profit margin is primarily driven by the difference between the low Dangote gantry price (₦699/Litre) and the average market pump price. The elimination of logistics costs (through free delivery) is a major competitive advantage, allowing for higher margins compared to other marketers who manage their own haulage.
Bank Guarantee Impact: The bank guarantee cost (approx. ₦69.9 million) is a minor expense relative to the gross profit. Its primary value lies in unlocking the credit facility, which acts as short-term financing for the entire ₦6.99 billion cost of the fuel, providing significant leverage and cash flow benefits to Midland Cosmos.
Market Volatility: Marketers' profits have been volatile following the removal of fuel subsidies and the ongoing "price war" between major players. The current low gantry price is a strategic move by Dangote to ensure market dominance, which Midland Cosmos is positioned to leverage for high short-term returns.
Operational Costs and Market Analysis (Feasibility Study)
Expense Category Estimated Cost (₦) Percentage of Revenue Notes
Total Revenue ₦8,410,000,000 100.0% (10M Liters * ₦841/Litre Avg. Retail)
Less: Cost of Goods Sold ₦6,990,000,000 83.1% (10M Liters * ₦699/Litre Gantry Price)
Gross Profit ₦1,420,000,000 16.9%
Less: Operating Expenses
Bank Guarantee Fee ₦69,900,000 0.8% Assumed maximum 1% of the gantry cost for the first year
Staff Salaries & Wages ₦15,000,000 0.2% Estimated for the transaction period
Marketing & Admin Overheads ₦10,000,000 0.1% General business expenses
Total Operating Expenses ₦94,900,000 1.1%
Profit Before Tax (EBT) ₦1,325,100,000 15.8%
Less: Estimated Income Tax ₦397,530,000 4.7% Assumed 30% corporate tax rate
Net Profit (EAT) ₦927,570,000 11.0%
continue
To finalize the business plan for Midland Cosmos Oil and Gas, we detail the specific registration requirements for the Dangote Refinery, the utilization of its credit incentives, and a comprehensive risk assessment for the 10 million liter transaction.
1. Registration & KYC Requirements
To lift product directly, Midland Cosmos must register via the Dangote Customer Portal. Required documentation as of late 2025 includes:
Corporate Identity: Certificate of Incorporation (CAC), Memorandum and Articles of Association, and a list of all company directors.
Regulatory Compliance: Valid operational licenses (e.g., from the Nigerian Midstream and Downstream Petroleum Regulatory Authority - NMDPRA).
Tax Compliance: Tax Identification Number (TIN) and a Tax Clearance Certificate valid for the current period.
Financial Proof: Three years of audited accounts and a formal bank reference letter.
2. Credit Facility & Bank Guarantee Strategy
The refinery offers a 10-day credit facility specifically designed to support dealer liquidity.
Eligibility: Marketers must provide a bank guarantee covering the total value of the requested volume. For 10 million liters at ₦699/litre, the guarantee must cover ₦6.99 billion.
Minimum Order: While some incentives exist for smaller orders (5,000 to 250,000 liters), bulk credit facilities typically target high-volume buyers.
Timing: The 10-day window allows Midland Cosmos to distribute and sell the product before the payment to Dangote is due, effectively utilizing the refinery’s inventory as working capital.
3. Comprehensive Risk Assessment
Risk Factor Impact Mitigation Strategy
Market Volatility High The refinery has adjusted prices 20 times in 2025 to stay competitive. Midland Cosmos should use a dynamic pricing model.
Logistics Delays Medium Utilize Dangote’s free direct delivery service using its new 4,000 CNG-powered tankers to bypass haulage costs and delays.
Tax Liabilities High Under the Nigeria Tax Act 2025, a 4% Development Levy replaces older sector-specific taxes, and a 30% CIT applies to profits.
Credit Risk Medium Ensure high retail turnover within the 10-day window to avoid triggering the bank guarantee and incurring penalty interest.
4. 2025 Strategic Financial Outlook
With an average national retail price still exceeding ₦1,000 per litre in many regions (despite the ₦699 gantry price), the potential for high margins is significant for early movers.
Geographic Advantage: Pricing in the South-West Zone is generally lower (approx. ₦1,116) compared to the North-East (approx. ₦1,245), suggesting that Midland Cosmos should prioritize distribution in northern regions to maximize the retail-gantry spread.
Sustainability Bonus: Utilizing CNG-powered delivery trucks aligns with the 2025 fiscal shift toward cleaner energy, which may offer future tax credits under the Economic Development Incentive (EDI) framework.
5. Compliance and Regulatory Framework
To operate Midland Cosmos Oil and Gas as a primary marketer in late 2025, the following regulatory hurdles must be cleared to maintain the Dangote partnership:
NMDPRA Licensing: Secure or renew the Petroleum Product Marketing License through the NMDPRA Portal. Key requirements include proof of technical competence, a 3-year investment plan, and evidence of a Medical Retainership Agreement.
Operational Directives: Comply with the refinery's September 2025 mandate that suspended self-collection gantry sales. Midland Cosmos must utilize the refinery's Free Delivery Scheme to avoid payment rejection and ensure product loading.
Tax Obligations: Under 2025 regulations, companies must maintain a current Tax Clearance Certificate and TIN for all refinery transactions. Corporate Income Tax (CIT) remains at 30% for large companies, with a focus on documenting "Development Levies" integrated into the new fiscal framework.
6. 2025 Market Competitive Analysis
The "Price War" of late 2025 has created a high-volume, low-margin environment.
Price Benchmarks: As of December 2025, Dangote's gantry price is ₦699 per litre, having been adjusted 20 times in the year to stay below import costs.
Major Competitors: NNPCL has responded by dropping its retail prices to between ₦825 and ₦840 depending on location, while MRS (a Dangote partner) sells at ₦739.
Zonal Strategy: Midland Cosmos should target the North West and North East zones, where average retail prices remained higher (exceeding ₦1,300 in some areas like Adamawa and Kaduna) compared to the South West average of ₦1,091. This maximizes the spread against the flat ₦699 gantry price.
7. Financial Feasibility: Net Present Value (NPV) Summary
For a 10 million liter transaction cycle:
Initial Outlay (Bank Guarantee Cost): ~₦69.9 million (1% of product value) [Estimated based on industry standards].
Projected Net Cash Flow (10 Days): ~₦927.57 million [Based on ₦841 average retail price].
Breakeven Point: Achieved within the first 24 hours of product distribution to retail outlets, provided the 10-day credit window is utilized to manage liquidity.
8. Implementation Timeline
Week 1: Finalize Bank Guarantee for ₦6.99 billion and update NMDPRA Marketing License.
Week 2: Complete registration on the Dangote Customer Portal and submit the 10 million liter purchase order.
Week 3: Coordinate with Dangote’s logistics team for the deployment of CNG-powered tankers to designated North-Western retail hubs.
Week 4: Monitor retail sales and ensure full repayment of the 10-day credit facility to maintain a high credit rating with the refinery.
No comments:
Post a Comment