How Dangote Refinery Operations, Petrol Subsidy Removal, Sent 70 Fuel Tank Farms Out of Business

• Since the removal of fuel subsidies in 2023, many fuel tank farms have struggled to stay in business
• Recent data shows that more than half the tank farms in Nigeria have shut down operations and have zero product in stock
• Insiders have shared several issues that affected the tank farm business over the last two years

Legit.ng journalist Ruth Okwumbu-Imafidon has over a decade of experience in business reporting across digital and mainstream media.

President Bola Ahmed Tinubu, in his inaugural speech in May 2023, announced the immediate removal of fuel subsidies.

This move triggered several ripple effects, including an immediate 200% jump in fuel prices, greatly reducing the purchasing power of fuel marketers.

Almost two years later, over 70 fuel tank farms have shut down business operations, and several others are barely surviving due to low patronage.

Insider information reveals that the 70 tank farm owners were forced out of business due to the sharp drop in patronage from retailers and station owners.

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With their facilities left idle, it means that 58% of the 120 approved facilities listed on petroleumprice.ng are now out of use.

Why tank farms are struggling to stay afloat

Several tank farms in Lagos are sited around Ijegun, Ojo and Apapa axes where marine tankers easily offload products.

Current data from Petroleumprice.ng shows that only 50 tank farms are still active with real-time price and other details displayed, while 70 have zero product in storage.

About 30 of these functional depots are in Lagos, 10 in the Warri/Ogbara axis, 4 in Calabar and 6 at the Port Harcourt/Onne axis.

The PUNCH news reports that several operators are now opting for trucking options, instead of buying from the tank farms, which used to serve as an intermediary, a safe location for marine tankers to offload their products, and for the marketers to buy from.

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Before May 2023, fuel importation was the order of the day, and the tank farms received high patronage due to the key role they played in ensuring price stability and steady availability of petroleum products.

Insider explains how Dangote Refinery affected tank farms

An oil and gas expert, Olatide Jeremiah, told the PUNCH that the increase in fuel prices following the removal of the subsidy meant that the tank farms needed three times their capital to continue operating at the same scale, with lower profit margins.

Olatide added that when the Dangote Refinery fully commenced operations in 2024, the situation worsened because the tank farm owners could not compete with the gantry prices offered by the Dangote Refinery.

Olatide said;

“Due to heavy bank debts, some shut down their depot, some placed their depot on lease and some have placed their depots on sale.

“Many depot owners are not happy with Dangote refinery because of its gantry loading at its terminals. I can categorically tell you Dangote’s gantry loading and his high ship prices are cogent reasons why some depot owners don’t patronise the refinery.”

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He noted that if the Dangote Refinery can instead sell to the tank farm owners to distribute to retail outlets through trucks, then those tank farms can get back into business.

The Dangote Refinery also exports petroleum products to other countries, removing the need for fuel imports.

Recall that the Port Harcourt refinery also produces and exports to other countries.

Dangote Refinery set to run at full capacity

In related news, the President of Dangote Oil refinery, Aliko Dangote, said that the refinery might begin operating at full capacity by the beginning of Q2, 2025.

The refinery has already attained 65% production capacity and is meeting market needs for the product in Nigeria and other countries.

The refinery also exported about 1.8 million barrels of jet fuel to the United States of America last month.

Source: Legit.ng