A price war between Dangote Petroleum Refinery and the Nigerian National Petroleum Corporation Limited (NNPCL) has led oil marketers to reduce their purchasing volumes amid mounting losses from rapid price reductions.
The competition began in November 2024 when Dangote lowered petrol prices from N990 to N970 per litre, followed by further cuts to N899, citing holiday relief for Nigerians. NNPCL responded by matching the N899 price at its outlets.
The price cuts continued into 2025, with Dangote reducing prices to N890 in February and then to N825 per litre by February 27. NNPCL countered with a N860 per litre price at its retail outlets on March 3.
While consumers have benefited from these price reductions, oil marketers are suffering significant losses, estimated at N2.5 billion daily and N75 billion monthly.
"The ongoing price reduction is affecting oil marketers negatively because we are losing money," said Hammed Fashola, National Vice President of Independent Petroleum Marketers Association of Nigeria (IPMAN). "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."
Marketers are now purchasing smaller quantities they can sell within a week to minimize potential losses from further price drops.
Adding to the competitive landscape, the landing cost of imported petrol dropped to N774.82 per litre on Tuesday, below Dangote's ex-depot price of N825. This decline follows Brent crude falling to $70 per barrel and U.S. WTI crude to $66.70 by March 12, down from February's prices of around $76 and $69 respectively.
In response, Dangote reduced its price further to N815 per litre. Fashola suggested prices could fall to as low as N500 per litre if crude drops to around $40 per barrel and the naira strengthens below N1,000 per dollar.
According to the Nigerian Bureau of Statistics, Nigeria's petrol imports increased 105 percent in 2024 to N15.42 trillion. Despite concerns about local refinery viability, Fashola supports continued imports as a check against monopolistic practices.
Financial analyst Bismarck Rewane noted that the price war will only continue if global oil prices keep falling. "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."
With reports from Punch
