MAJOR Petroleum oil marketers are currently in a pricing row with Dangote over market dominance, as they are no longer comfortable with Dangote’s petroleum pricing dominance.
President Bola Tinubu has made ‘no more subsidy’ a major policy thrust of his administration, which saw total deregulation of the petroleum downstream sector with the enforcement of the Petroleum Industry Act (PIA) 2021, effective from May 29, 2023.
Although it left more money in the hands of the federal and state governments, the deregulation has not had a meaningful impact on the lives of Nigerians, as promises of social safety nets made before the subsidy removal remain largely unmet.
The opaque nature of the subsidy removal puts the Nigerian National Petroleum Company Limited (NNPCL) on the spot with the latest revelation from the World Bank that the national oil company remits only 50 per cent of the subsidy earnings to the government.
The global lending institution berated the national oil company on poor remittance of subsidy savings, stating that it started transferring the revenue gains to the Federation Account in January this year.
“It has been remitting only 50 per cent of these gains, using the rest to offset past arrears,” the global financial lender stated in its latest report,” Nigerian Development Update’ released on May 12.
Apart from the opacity that characterised the management of the subsidy proceeds, a major concern is the long-drawn battle between the marketers and the Dangote Refinery regarding market dominance and price influence.
Why NNPCL maintained sole importation status post-subsidy era
Before the deregulation of the petroleum downstream sector, the NNPCL was the sole importer with a few select major marketers. The NNPCL did the large chunk of the importation enabled by the defunct Petroleum Act of 1960, before the enactment of the Petroleum Industry Act in 2021.
With the enforcement of the deregulation under Tinubu’s administration, Dangote Petroleum’s 650,000 barrels per day refinery showed market dominance and capacity with its huge influence on pricing in the downstream sector.
Not just pricing influence, the Refinery, as reported by The ICIR on February 6, showed market dominance and exported two cargoes of aviation fuel to Saudi Aramco, the national oil company of Saudi Arabia.
“We are reaching the ambitious goals we set for ourselves, and I’m pleased to announce that we’ve just sold two cargoes of jet fuel to Saudi Aramco,” Dangote, said when he visited the Nigerian Economic Group (NESG) on February 5, 2025.
While Nigeria’s state-owned refineries remain largely inactive despite substantial investments in turnaround maintenance, the privately-owned Dangote Refinery has begun to reduce the country’s reliance on European fuel imports.
A report by the Organisation of Oil Petroleum Exporting Countries (OPEC) confirmed this development on January 15, 2025.
“The ongoing operational ramp-up efforts at Nigeria’s new Dangote Refinery and its gasoline(petrol)exports to the international market will likely weigh further on the European gasoline market.
“Continued gasoline production in Nigeria, a country that has relied heavily on imports to meet its domestic fuel needs in the past, will most likely continue to free up gasoline volumes in international markets, which will call for new destinations and flow adjustments for the extra volumes going forward,” the report said.
Commenting on the market dominance, the Chief Executive Officer (CEO)of Financial Derivatives Company, Bismarck Rewane, said the Nigerian government must continue to support Dangote as a market leader in the petroleum downstream sector.
According to him, the 650,000 barrels per day Refinery is a necessary tools to solve some of the challenges in the oil sector.
“Before now, people spent half of their time trying to queue up for petrol and queue up for everything because of bottlenecks in the sector. If one project can de-bottleneck a particular sector, we would have increased the probability of having higher productivity human, labour, and capital stock significantly,” he said.
Marketers lament Dangote’s overbearing influence on pricing
Last week, Depot and Petroleum Products Marketers Association of Nigeria (DAPMAN) raised an alarm over Dangote Refinery’s pricing influence and emerging market control in the petroleum downstream industry.
The association disclosed via its Executive Secretary, Olufemi Adewole, that the refinery’s size(650,000 barrels per day) gives it an edge over other players in the market.
Adewole, who disclosed this in a monitored interview on Friday, May 9, said Dangote’s market dominance could disrupt the petroleum downstream industry.
He warned that control of the Dangote Refinery could disrupt the market if not properly managed.
Adewole, however, said there are vested interests among private depot owners who have invested billions in the sector.
He said the depot owners stood by Nigerians in times of dire need before the emergence of the Dangote Refinery.
According to the DAPMAN scribe, the Dangote Refinery has not met the petrol consumption demands of Nigeria, which has reduced recently.
He advised the government that ending fuel imports for now would create chaos, stating that a phased strategy is more agreeable once domestic refineries begin production.
He further expressed worry, saying the scale of Dangote Refinery gives it an excessive edge over pricing and supply channels.
What does the petroleum regulatory authority’s data say about PMS imports?
Farouk Ahmed, the Chief Executive Officer (CEO) of Nigeria Midstream and Downstream Petroleum Regulatory Auhtority (NMPDRA), on April 14, 2025, said petroleum imports decreased from 44.6 million litres per day in August 2024 to 14.7 million litres as of April 13, 2025.
This, he said, represents a reduction of approximately 30 million litres, or 67 per cent, in the eight months, noting that local production increased by 670 per cent during the same period.
He attributed the increase to the Port Harcourt Refining Company’s gradual reactivation in November 2024 and increased production from modular refineries located throughout the nation.
The ICIR reports that NMDPRA’s data indicates a substantial reduction in petrol imports, likely due to increased local production and/or decreased consumption.
“After contributing virtually nothing in August 2024, local plants delivered 26.2 million litres per day in early April, a jump from the 3.4 million litres recorded in September 2025, which was the first month with measurable output,” Ahmed said.
Why marketers are unable to compete with Dangote on the same level
The National Publicity Secretary of the Independent Petroleum Marketers Association of Nigeria (IPMAN), Chinedu Ukadike, told The ICIR that Dangote prepared ahead to dominate the marketers because of Nigeria’s moribund refineries, as it appears NNPCL were more comfortable with large-scale importation in the subsidy era.
He noted that the NNPCL, before the subsidy removal era, was the sole importer of petroleum products and distributed them through its channels to marketers and major retail outlets.
According to the IPMAN’s secretary, before the coming of Dangote, the NNPCL dictated the price with fuel importation of almost 75 per cent of Nigeria’s consumption. However, the new era of deregulation saw Dangote’s huge influence and pricing.
“Now, most of the NNPCL refineries are docile and moribund, with the Petroleum Industry Act (PIA) implementation giving Dangote the leverage for the domestic market. You cannot take it away from him as a businessman,” he said.
He stressed that most major marketers are getting products from him because of his over 600 million litres in reserves, with importation logistics and exchange rate a major factor impeding some marketers’ importation choice.
While noting some concerns of pricing by marketers, Ukadike said ‘Price disparity’ in a free market is a major determinant of who dominates a deregulated market.
“DAPPMAN members whose tank farms are mostly in the coastal areas have raised issues with the pricing of Dangote, noting that the importer price is slightly higher than what they sell at the gantry. We are currently at what we call the “Price disparity stage”. Some of us have to get fuel from him to stay in business. Price disparity is inherent in a free market economy,” Ukadike stressed.
The ICIR findings have shown that Dangote sells to every marketer at the refinery gantry for the same price, without preference to ‘bulk purchasers’, a development that doesn’t sit so well with some marketers.
“In most cases, some marketers who loaded from the gantry at N900 per litre, would still be discharging to their various petroleum retail outlets, and all of a sudden a price change announcement would be heard from Dangote, putting most of them on deficit,” a major Oil marketer who who doesn’t want his name mentioned in print told The ICIR.
Ukadike suggested to the petroleum regulatory authorities to continue monitoring the market to ensure fair play for all the industry players, devoid of anti-competition laws.
