The ongoing price war between the Nigerian National Petroleum Corporation Limited (NNPCL) and Dangote Petroleum Refinery continues to reshape Nigeria’s downstream oil sector.
The battle, which has led to successive reductions in Premium Motor Spirit (PMS) prices, is forcing oil marketers to reduce their purchase volumes in an effort to mitigate mounting financial losses.
The Genesis of the Price War
The competition between the two fuel giants began in November 2024 when Dangote Petroleum Refinery made an unprecedented move by lowering its ex-depot price of petrol from N990 to N970 per litre.
In an effort to stay competitive, Dangote later reduced the price further to N899 per litre in December, citing the need to ease financial burdens on Nigerians during the holiday season.
In response, NNPCL swiftly slashed its own ex-depot price from N1,040 to N899 per litre, according to the Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN).
This aggressive pricing strategy continued into 2025, with Dangote making further cuts to N890 per litre on February 1, followed by a sharp drop to N825 per litre by February 27. NNPCL responded accordingly, adjusting its price to N860 per litre by March 3, thereby intensifying the ongoing price war.
Impact on Oil Marketers
While consumers have benefited from lower fuel prices, the frequent price drops have left oil marketers grappling with significant losses.
Many fuel importers and marketers are reportedly losing an estimated N2.5 billion daily, amounting to a staggering N75 billion in monthly losses.
As a result, marketers have begun adopting a more cautious approach, reducing the volume of PMS they purchase to avoid financial setbacks. The National Vice President of the Independent Petroleum Marketers Association of Nigeria (IPMAN), Hammed Fashola, confirmed this shift in strategy during an interview with newsmen.
“The ongoing price reduction is affecting oil marketers negatively because we are losing money. For instance, if I buy products at N900 per litre today and the price drops by evening, you can see the problem, especially if the product is meant to last a month,” Fashola stated.
“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, which is exactly what is happening now,” he added.
The Future of Fuel Pricing Regulation
In response to the instability, PETROAN has called for a regulatory framework that mandates fuel price adjustments only every six months. However, there is uncertainty about whether the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) will implement such a policy.
Despite the concerns of marketers, analysts suggest that the price war could be beneficial for Nigerians in the long run, as competition generally leads to fairer pricing and improved service delivery.
Global Oil Market Influence
A key factor contributing to the ongoing price war is the fluctuation in global crude oil prices.
On March 12, 2025, Brent crude prices fell to $70 per barrel, while U.S. West Texas Intermediate (WTI) dropped to $66.70, compared to around $76 and $69 per barrel in February.
This decline significantly impacted the cost of fuel imports, with the landing cost of imported PMS dropping to N774.82 per litre—lower than Dangote Refinery’s ex-depot price of N825 per litre.
Market analysts predict that if crude oil prices continue to decline, the price of petrol in Nigeria could drop further to around N800 per litre.
Some experts even speculate that if crude oil falls to $40 per barrel and the naira strengthens to below N1,000 per dollar, fuel prices could drop to as low as N500 per litre.
Concerns About Monopoly and Market Competition
One of the primary concerns among industry players is the potential for monopolistic control. Some industry stakeholders believe that the dominance of either NNPCL or Dangote Refinery in the market could lead to unfair pricing practices.
However, others argue that competition between the two entities is necessary to prevent price exploitation.
The Major Energies Marketers Association of Nigeria (MEMAN) noted that allowing fuel imports alongside local refining ensures a more competitive market, ultimately benefiting consumers. IPMAN’s Fashola echoed this sentiment, stating that “allowing importation serves as a check and balance” to ensure fair pricing.
“If we shut the market to fuel imports, we know how a typical Nigerian business will behave. So, allowing importation serves as a check and balance. I see no reason why imported PMS should be cheaper than locally refined fuel,” Fashola explained.
The Road Ahead
Financial experts believe that the price war will persist as long as global crude oil prices continue to decline. Bismarck Rewane, Managing Director of Financial Derivatives Company, noted that the price of crude oil ultimately determines the price of its refined products.
“The price of crude determines the price of its refined products. So, the only reason the price war will continue is if the price of crude oil drops sharply.
Then, we would see a further drop in the price of petrol. But if the price of crude increases again, which nobody can predict, we will see an increase in the price of petrol,” Rewane stated.
As the price war rages on, oil marketers will likely continue to adjust their purchasing strategies to minimize losses. Meanwhile, Nigerian consumers remain the primary beneficiaries of the competitive pricing, enjoying lower fuel costs in an otherwise challenging economic climate.
