Petroleum Price War Intensifies, Forcing Marketers To Limit Purchases

The ongoing price competition between Dangote Petroleum Refinery and the Nigerian National Petroleum Corporation Limited (NNPCL) has led oil marketers to cut back on fuel purchases to mitigate significant financial losses resulting from frequent price reductions in the downstream sector………..READ MORE

Since November 2024, the price battle has intensified, with Dangote Refinery reducing its ex-depot price of Premium Motor Spirit (PMS) from ₦990 to ₦970 per litre and further lowering it to ₦825 per litre by February 27, 2025. In response, NNPCL adjusted its pump price to ₦860 per litre on March 3, 2025, sustaining the competitive pricing trend.

Oil marketers, including members of the Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN) and the Independent Petroleum Marketers Association of Nigeria (IPMAN), have expressed concerns over these losses, advocating for price adjustments to be made only every six months to ensure stability in the sector.

IPMAN’s National Vice President, Hammed Fashola, acknowledged that while consumers benefit from the price reductions, the instability is adversely affecting marketers. He explained that frequent price drops lead to financial losses for those who purchase fuel at higher rates, forcing many marketers to reduce bulk purchases to minimize risks.

The Major Energies Marketers Association of Nigeria (MEMAN) reported that the landing cost of imported PMS fell to ₦774.82 per litre, dropping below Dangote Refinery’s ₦825 per litre ex-depot price. This decline is attributed to falling global crude oil prices, with Brent crude at $70 per barrel and U.S. WTI crude at $66.70 per barrel as of March 12, 2025.

Industry analysts predict that if crude oil prices fall further to $40 per barrel and the naira strengthens below ₦1,000 per dollar, petrol prices in Nigeria could drop to as low as ₦500 per litre. Fashola noted that while the price war benefits consumers and encourages competition in the deregulated market, it has placed significant pressure on oil marketers.

The Nigerian Bureau of Statistics (NBS) recently reported a 105% surge in Nigeria’s petrol imports in 2024, amounting to ₦15.42 trillion, raising questions about the sustainability of local refining efforts amid increased importation.

Fashola emphasized the importance of an open market, cautioning against monopolistic control. He stated that allowing fuel imports ensures fair competition and keeps local refiners accountable. The ongoing price battle between Dangote and NNPCL highlights the effects of a deregulated market, where price adjustments depend largely on global crude oil trends.

Economic analyst Bismarck Rewane suggested that the competition will persist as long as global crude oil prices continue to decline. However, if oil prices rebound, local petrol prices will likely rise again, as refiners cannot sell below cost. He further noted that pricing strategies remain a critical tool in market competition, with companies adjusting prices based on market conditions to maintain profitability,