NNPC-Dangote price war forces oil marketers to cut fuel purchases
The price war in Nigeria’s downstream oil sector has intensified, leading to frequent reductions in the price of Premium Motor Spirit (PMS/Petrol) and prompting oil marketers to slash their purchase volumes to mitigate losses.
The competition, primarily between Dangote Petroleum Refinery and the Nigerian National Petroleum Corporation Limited (NNPCL), began in November 2024 when Dangote reduced the price of petrol from ₦990 to ₦970 per litre.
This move triggered a series of price cuts, with Dangote further lowering prices to ₦899, ₦890, and finally ₦825 per litre as of February 27, 2025. NNPCL responded by reducing its ex-depot price to ₦860 per litre on March 3, reflecting the ongoing battle for market dominance.
According to industry stakeholders, while the price war has benefited Nigerians by driving down fuel costs, oil marketers are struggling with significant losses due to unpredictable price fluctuations.
The Independent Petroleum Marketers Association of Nigeria (IPMAN) revealed that marketers lose an estimated ₦2.5 billion daily and ₦75 billion monthly due to rapid price adjustments.
Speaking on the situation, IPMAN National Vice President Hammed Fashola stated that the volatility in fuel prices is forcing marketers to minimize their purchases to avoid financial losses. He noted that many now prefer to buy only quantities they can sell within a week to safeguard their businesses.
Meanwhile, the landing cost of imported fuel dropped to ₦774.82 per litre on March 12, making it cheaper than Dangote’s ex-depot price. This development has intensified competition, with industry players predicting that PMS prices could fall further if crude oil prices continue to decline. Experts suggest that if global crude prices drop to $40 per barrel and the naira strengthens below ₦1,000 per dollar, petrol prices could go as low as ₦500 per litre.
Economic analysts, however, warn that the price war may not last indefinitely. Financial expert Bismarck Rewane stated that fuel prices are directly tied to global crude oil rates, and any rebound in oil prices could increase PMS costs.
As the sector navigates this turbulent period, marketers are calling for regulatory measures to stabilize prices, suggesting a six-month adjustment policy. However, given the ongoing market deregulation and competitive pricing strategy adopted by key players, it remains uncertain whether such a measure will be implemented.
