The ongoing price war between Dangote Petroleum Refinery and the Nigerian National Petroleum Corporation Limited is destabilising Nigeria’s fuel market. While consumers benefit from lower prices, marketers face severe financial losses, with estimated losses of N2.5bn daily. The situation raises concerns about the viability of local refineries and market sustainability amid fluctuating global oil prices.
LAGOS. Nigeria — The continuous price war between Dangote Petroleum Refinery and the Nigerian National Petroleum Corporation Limited (NNPCL) is changing the face of fuel marketing in Nigeria in a dramatic development that has rocked the country’s downstream oil industry.
In addition to benefiting Nigerian consumers, the recent months’ unrelenting price reductions on Premium Motor Spirit (PMS) have put oil marketers in a more vulnerable position.
The instability that results from fuel prices falling in an attempt to gain market share is causing losses that are estimated to be N2.5 billion per day on average and an astounding N75 billion per month.
In addition to exploring the possible long-term effects on Nigeria’s energy market, this research explores the causes, dynamics, and wider economic ramifications of this dramatic confrontation.
A Battle Born of Competition and Deregulation
The fierce competition between Dangote Petroleum Refinery and NNPCL ignited in November 2024 when Africa’s largest private refinery slashed its petrol price from N990 to N970 per litre.
This initial move was quickly escalated when Dangote further reduced its price to N899 per litre, ostensibly to provide much-needed relief to Nigerians during the festive season.
In a swift counter-move, NNPCL mirrored these reductions by lowering its ex-depot price from N1,040 to N899 per litre, setting off a chain reaction in the sector.
Subsequent price adjustments saw Dangote dropping its rates further—to N890 per litre on February 1, 2025, and then to an eye-watering N825 per litre on February 27—while NNPCL retail outlets reported a pump price adjustment to N860 per litre on March 3, 2025.
This relentless cutting of prices highlights the inherent risks of deregulation. Proponents argue that the fierce competition spurs market efficiency and ensures that Nigerians benefit from lower fuel costs.
However, industry stakeholders, particularly oil marketers and importers, warn that the incessant price drops are not without significant drawbacks.
The continuous adjustments are forcing marketers to reduce purchase volumes drastically to avoid accumulating losses when the price drops even further within a single trading day.
As one senior industry insider observed, “If you buy products at N900 per litre today and the price drops by evening, the financial impact on your monthly operations is severe.”
The Ripple Effects on Oil Marketers
As the price war intensifies, oil marketers are grappling with unprecedented challenges. Faced with the prospect of volatile market conditions, many have resorted to purchasing fuel in smaller volumes.
This strategy, while mitigating immediate losses, has a ripple effect on the entire supply chain. Reduced bulk purchases translate to diminished economies of scale, potentially leading to supply inconsistencies and logistical challenges.
Marketers are forced to walk a tightrope, balancing the need to stay competitive against the risk of overstocking at a price point that might soon become obsolete.
The National Vice President of the Independent Petroleum Marketers Association of Nigeria (IPMAN), Hammed Fashola, has been unequivocal in his assessment of the situation.
Speaking to Sunday PUNCH, Fashola emphasised the precarious position of marketers:
“The ongoing price reduction is affecting oil marketers negatively because we are losing money. Not buying large volumes of PMS is the only way to play it safe because when you buy in bulk, the price may drop again. It is a short-term measure to avoid excessive losses.”
His remarks underscore a critical tension: while Nigerian consumers enjoy the immediate benefit of lower pump prices, the instability is jeopardising the financial viability of the downstream sector—a fundamental pillar of the country’s energy infrastructure.
Global Oil Prices: The External Catalyst
The fierce competition in Nigeria is not occurring in a vacuum. The recent decline in global crude oil prices has played a pivotal role in fuelling the price war.
Market data indicates that Brent crude prices have fallen to around $70 per barrel, with U.S. West Texas Intermediate (WTI) crude dipping to approximately $66.70 per barrel—figures that contrast starkly with the higher prices recorded in February.
These external market forces have provided both Dangote and NNPCL with the leverage to reduce prices aggressively.
Dangote’s Group Chief Branding and Communications Officer, Anthony Chiejina, stated that the latest price adjustments were “a direct response to the positive outlook within the global energy and gas markets and the recent reduction in international crude oil prices.”
Moreover, recent statistics from the Major Energies Marketers Association of Nigeria reveal that the landing cost of imported fuel has also witnessed a significant drop.
On Tuesday, this cost fell to N774.82 per litre, undercutting even Dangote Refinery’s ex-depot price of N825 per litre.
Such shifts are not just numeric adjustments; they are symptomatic of a global energy market in flux, where external economic pressures and shifting supply-demand dynamics are reshaping local price structures.
If global oil prices continue their downward trajectory, pundits speculate that the pump price of PMS could potentially stabilise around N800 per litre or even plummet further.
The Debate on Market Regulation
The volatility inherent in the current price war has reignited calls for regulatory intervention. Oil marketers, under the auspices of PETROAN, have lobbied for a regulatory framework that mandates fuel prices be adjusted no more than once every six months.
Their argument is compelling: frequent price adjustments not only destabilise the market but also put undue pressure on retailers, who must constantly recalibrate their operations in response to rapid fluctuations.
Critics, however, argue that such regulation could stifle competition—a driving force behind the current market benefits for consumers.
They contend that in a free-market environment, competition naturally drives efficiency and cost reduction, ultimately resulting in lower prices for Nigerians.
The IPMAN vice president echoed this sentiment, asserting that open market dynamics and the availability of cheaper imported fuel serve as an essential check against monopolistic practices.
“We should not be selfish,” he declared, emphasising that allowing the importation of fuel ensures that no single player can dominate the market to the detriment of consumers.
This debate pits short-term consumer gains against the long-term sustainability of the industry.
While lower prices are undoubtedly beneficial to the public, the resultant losses for oil marketers raise concerns about the potential collapse of a sector that is critical to national energy security and economic stability.
The Economic Implications for Nigeria
Beyond the immediate financial losses incurred by oil marketers, the broader economic implications of the price war are profound.
According to the Nigerian Bureau of Statistics, petrol imports surged by 105 percent in 2024, reaching a staggering N15.42tn.
This dramatic increase in imports is both a symptom and a cause of the ongoing price volatility.
On one hand, the influx of imported fuel intensifies competition and drives down prices; on the other, it raises serious questions about the viability of local refineries in an increasingly globalised market.
The potential collapse of local refining capacity would have far-reaching consequences. Local refineries, such as the Dangote Petroleum Refinery, have been heralded as beacons of Nigeria’s industrial progress and self-sufficiency.
However, if the current pricing dynamics persist, the economic sustainability of these facilities may be jeopardised.
An over-reliance on imported fuel could erode domestic refining capacity, leaving Nigeria vulnerable to global market fluctuations—a risk that would ultimately be borne by the nation’s economy and its citizens.
Economists, including Financial Derivatives Company MD Bismarck Rewane, caution that the ongoing price war is unsustainable if global oil prices rebound.
“The price of crude determines the price of its refined products,” Rewane noted.
His stark warning underscores a fundamental truth: the current price reductions are a double-edged sword.
Should global prices recover, the local market may face an abrupt reversal, forcing refiners and marketers alike to grapple with the repercussions of a once-in-a-lifetime pricing anomaly.
A Glimpse into the Future
As the NNPCL-Dangote price war rages on, industry observers are left pondering the long-term ramifications for Nigeria’s energy sector.
The immediate benefits to the consumer are indisputable—lower fuel prices have the potential to boost disposable incomes and stimulate economic activity. Yet, the sustainability of such benefits remains in question.
The reduction in purchase volumes by oil marketers, coupled with mounting financial losses, signals a market that is teetering on the edge of instability.
Some experts speculate that the price war could ultimately serve as a catalyst for much-needed reform within Nigeria’s downstream sector.
By exposing the vulnerabilities of a deregulated market, the ongoing saga may prompt policymakers to introduce measures that balance consumer interests with industry sustainability.
Whether such regulatory intervention will materialise remains uncertain, but one thing is clear: the current price war is not merely a transient phase—it is a harbinger of deeper structural challenges that must be addressed if Nigeria is to secure a stable and prosperous energy future.
Conclusion
The relentless price war between Dangote Petroleum Refinery and NNPCL is a microcosm of the broader tensions within Nigeria’s energy sector.
On one hand, the fierce competition is driving down fuel prices, offering immediate relief to consumers.
On the other, it is placing unsustainable pressures on oil marketers and exposing the fragility of a market influenced by volatile global oil prices.
As policymakers, industry stakeholders, and consumers navigate this complex landscape, the challenge will be to harness the benefits of competition without sacrificing the long-term viability of Nigeria’s domestic refining and marketing industries.
With global crude prices fluctuating and market uncertainty looming, the coming months will be critical in determining whether the current price reductions are a fleeting phenomenon or a permanent fixture in Nigeria’s energy policy.
For now, the NNPCL-Dangote price war stands as a dramatic testament to the power of deregulation—a bold, contentious experiment whose outcomes will shape the future of Nigeria’s energy landscape for years to come.
- Additional reports from Atlantic Post Senior Correspondents Taiwo Adebowale, Peter Jene and Osaigbovo Okungbowa.
