As the price war in the downstream oil sector continues leading to recurring reductions in the price of Premium Motor Spirit commonly known as petrol, oil marketers have resorted to slashing the volume of their fuel purchase amid mounting losses from the price drop.
The price war, primarily between Dangote Petroleum Refinery and the Nigerian National Petroleum Corporation Limited, began in November 2024 when the Africa’s largest private refinery lowered the price of petrol from N990 to N970 per litre.
Dangote further reduced it to N899 per litre, citing the need to provide relief for Nigerians during the holiday season.
Days after Dangote’s move, NNPCL also slashed its ex-depot price of the product from N1,040 to N899 per litre, according to the Petroleum Products Retail Outlets Owners Association of Nigeria.
On February 1, 2025, Dangote Refinery again reduced the petrol price to N890 per litre before further lowering it to N825 per litre on February 27, setting the stage for continued pricing competition with NNPCL.
In a statement signed by its Group Chief Branding and Communications Officer, Anthony Chiejina, the refinery said the price adjustment was a direct response to the positive outlook within the global energy and gas markets and the recent reduction in international crude oil prices.
However, on March 3, 2025, some NNPCL retail outlets reported that the oil firm had also adjusted its petrol pump price to N860 per litre, reflecting the intense price war among fuel merchants.
According to stakeholders in the downstream sector, the frequent price reductions, signaling the ongoing price war between Dangote Refinery and NNPCL, have been beneficial to Nigerians.
However, energy experts argue that the continuous decline in PMS prices has been causing significant losses for oil marketers and importers, who lose an average of N2.5bn daily and N75bn monthly.
Amid mounting losses, oil marketers under PETROAN have called for a regulation mandating that fuel prices be adjusted only every six months, but it remains uncertain whether the regulatory body will approve the demand.
Speaking with Sunday PUNCH, the National Vice President of IPMAN, Hammed Fashola, said that while the price war has benefited Nigerians, the unpredictability of fuel price reductions is forcing oil marketers to cut their purchases, leading to significant daily losses.
He said, “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. That is the challenge marketers are facing now.
“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. For all marketers, that is the reality we are dealing with.
“We just need to be careful when making purchases. We must equip ourselves with adequate information by understanding global market trends before buying. And we will only purchase products we are confident can be sold within a week.”
When asked if marketers had begun reducing their purchase volumes, the IPMAN VP said, “Of course. Any reasonable person would do that to minimise losses. Our people have already started. It is just a precautionary measure. How long this will last depend on the situation. If the price stabilises, everyone will relax and return to normal business. But if it remains unstable, there will always be the fear that prices could drop at any time. So, everyone would rather be cautious. It is about avoiding excessive losses. However, this practice might not last long, as it is only a short-term measure.”
In yet another price change, the landing cost of PMS on Tuesday dropped to N774.82 per litre, making it cheaper than Dangote Refinery’s ex-depot price of N825 per litre.
The Major Energies Marketers Association of Nigeria revealed this in its latest Competency Centre daily energy data released during the week, noting that the estimated import parity into tanks had reduced by N152.56 or 16.5 percent from the N927.48 per litre recorded on February 21, 2025.
This drop follows a decline in Brent crude prices, which fell to $70 per barrel, while U.S. WTI crude dropped to $66.70 as of Wednesday, March 12, 2025, compared to around $76 and $69 per barrel, respectively, in February.
Marketers suggested that the continued drop in global oil prices could push the pump price of PMS to around N800 per litre. They added that the latest reduction in fuel import landing costs would further intensify the price war between Dangote Refinery, NNPC, and fuel importers.
However, speaking on Thursday, Fashola noted that prices could fall even further to as low as N500 per litre if crude oil drops to around $40 per barrel and the naira strengthens to below N1,000 per dollar.
He said, “On Tuesday, the landing cost of imported fuel was N774.82 per litre, cheaper than what Dangote was selling. But Dangote responded by lowering its price to N815 per litre. So, I believe this price war is beneficial for Nigeria. That is the beauty of deregulation. It fosters competition. As more players enter the market, we expect further price reductions.”
In its latest foreign trade report, the Nigerian Bureau of Statistics disclosed that the country’s petrol imports surged by 105 percent in 2024, reaching a staggering N15.42tn.
According to energy experts, the rise in fuel imports has raised concerns about the viability of local refineries and the impact of the ongoing price war between NNPC and Dangote Refinery.
But the IPMAN VP said aside from preventing monopolies, the increased fuel imports and lower-cost imported products are driving down the prices of locally refined petrol.
He said, “We should not be selfish. We must allow an open market where everyone can participate. We must also avoid monopolies because we do not want anyone taking undue advantage of Nigerians.
“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.”
“In anything you do, there must be an alternative to prevent monopolies and ensure no one takes advantage of others. If importation is allowed and someone can bring in fuel at a lower price, what Nigeria needs is affordable, high-quality fuel. This will push local refiners to become more competitive and lower their prices because I see no reason why imported fuel should be cheaper than locally refined products,” the IPMAN VP stated.
Meanwhile, the Managing Director of Financial Derivatives Company, Bismarck Rewane, has stated that the ongoing price war among the fuel merchants will only persist if the global oil price continues to drop as witnessed in recent days.
In an interview with Sunday PUNCH, the renowned economist noted that if the global price of crude increases again, the price of the product would definitely go up in the country as the local producers cannot sell below their cost price.
He stated, “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. It is not in the hands of the refiners but on the global oil market, which is outside our control.”
Explaining why there is an obvious competition between Dangote and NNPCL, he said, “What do you expect? There must be competition. The way I see them, there is competition. But only one man can win. Whether there is competition or not, you must survive to be able to compete. And the only way you can survive is if you are selling above your cost price. As competitors, pricing is one of the tools for competition. When it’s comfortable, they will bring down their price within the market share. But when it is not comfortable, they won’t bring down the price.”
