The ongoing price war between Dangote Petroleum Refinery and the Nigerian National Petroleum Corporation Limited (NNPCL) has forced oil marketers to scale down fuel purchases, as they struggle to mitigate heavy losses caused by the frequent downward price adjustments in the downstream sector.
The price competition, which began in November 2024, intensified when Dangote Refinery reduced its ex-depot price of Premium Motor Spirit (PMS) from ₦990 to ₦970 per litre, eventually slashing it further to ₦825 per litre by February 27, 2025.
In response, NNPCL adjusted its pump price to ₦860 per litre on March 3, 2025, signaling an unrelenting price battle among key fuel merchants.
Oil marketers, under the Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN) and the Independent Petroleum Marketers Association of Nigeria (IPMAN), have raised concerns over massive financial losses, calling for fuel price adjustments to occur only every six months to ensure stability.
Speaking with Punch, IPMAN National Vice President, Hammed Fashola, acknowledged that while Nigerians benefit from the price reductions, the instability is wreaking havoc on marketers.
“The ongoing price reduction is affecting oil marketers negatively because we are losing money. If I buy products at ₦900 per litre today and the price drops by evening, that becomes a major problem, especially if the product was meant to last a month,” he explained.
Fashola confirmed that marketers have significantly reduced bulk purchases to minimize risks, adding, “Any reasonable marketer would take precautions. If prices continue fluctuating, everyone will remain cautious. However, if prices stabilize, businesses will resume normal operations.”
The Major Energies Marketers Association of Nigeria (MEMAN) revealed that the landing cost of imported PMS fell to ₦774.82 per litre on Tuesday, dropping below Dangote Refinery’s ₦825 per litre ex-depot price.
This reduction follows the decline in global crude oil prices, with Brent crude falling to $70 per barrel and U.S. WTI crude trading at $66.70 per barrel as of March 12, 2025.
Industry experts suggest that if crude oil dips further to $40 per barrel and the naira strengthens below ₦1,000 per dollar, fuel prices could plummet to as low as N500 per litre.
Fashola noted that the current price war benefits consumers and fosters healthy competition in the deregulated market.
“The beauty of deregulation is that it encourages competition. As more players enter the market, we expect further price reductions,” he said.
The Nigerian Bureau of Statistics (NBS) recently reported that Nigeria’s petrol imports surged by 105% in 2024, reaching a staggering ₦15.42 trillion, raising concerns about the viability of local refineries and the impact of the ongoing price war.
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 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.”
The post Fuel Price War Deepens As Oil Marketers Cut Purchases Amid Mounting Losses appeared first on Naija News.