The Nigerian downstream oil sector is currently witnessing a significant price competition between the Nigerian National Petroleum Company Limited (NNPCL) and Dangote Refinery, leading to substantial challenges for independent oil marketers.
In November 2024, Dangote Refinery reduced its Premium Motor Spirit (PMS) prices from ₦990 to ₦970 per litre. This strategic move prompted NNPCL to lower its ex-depot price from ₦1,040 to ₦899 per litre.
Subsequently, Dangote Refinery further decreased its prices to ₦899, ₦890, and finally ₦825 per litre by February 27, 2025. NNPCL responded on March 3, 2025, by reducing its ex-depot price to ₦860 per litre.
This aggressive pricing strategy has adversely affected independent oil marketers, leading to significant financial losses.
The Independent Petroleum Marketers Association of Nigeria (IPMAN) estimates daily losses at approximately ₦2.5 billion, totaling around ₦75 billion monthly.
To mitigate these losses, marketers have reduced their PMS purchases, adopting a cautious approach to inventory management.
Hammed Fashola, National Vice President of IPMAN, highlighted the challenges faced by marketers, stating that the ongoing price reductions negatively impact their operations, leading to substantial financial losses.
He emphasized that minimizing bulk purchases is a strategy to avoid further losses amid unpredictable price fluctuations.
Despite the challenges faced by marketers, consumers have benefited from the price competition through reduced petrol prices.
In Lagos, petrol prices have decreased to ₦860 per litre, reflecting a market driven by supply and demand dynamics.
While the price competition has favored consumers, there are concerns about potential monopolistic practices. Dangote’s pricing strategy, reminiscent of its approach in the cement industry, raises questions about the possibility of market dominance.
Industry experts emphasize the need for regulatory vigilance to prevent the emergence of a cartel that could fix prices, undermining standard market practices.
