In Nigeria’s downstream oil industry, it suddenly feels like a change of guard is ongoing based on reports that some marketers may soon switch from getting their premium motor spirit (PMS) supplies from the Nigerian National Petroleum Company (NNPC) Limited to a much cheaper bargain the Dangote Refinery, for example, is prepared to offer. 

Starting in February, Dangote announced a significant price reduction in its wholesaler figures to reflect what many Nigerian households will certainly prefer since their lives would be better for it.

A press release by the refinery at the beginning of the month said that it was reducing the ex-depot (gantry) price of Premium Motor Spirit (PMS), commonly known as petrol, from N950 to N890, effective from Saturday, 1st February 2025.

This strategic adjustment, the statement read, is a direct response to the positive outlook within the global energy and gas markets, as well as the recent reduction in international crude oil prices.

As the independent oil marketers have only seen this consideration happening on just one side, it is believed to be prompting a decision by them to abandon licensing deals they have had with the national oil company.

Instead of a reduction in the price of PMS or petrol, the NNPCL has been tilting towards an increase as seen with the value on display in Lagos State recently. Three Tuesdays ago was when the company increased petrol heading out of its filling stations to ₦960 up from ₦925 per litre, giving room for more strain in the pockets of buyers.

ALSO READ: PMS sales pitch by Dangote makes the product look so simple but can’t the price be lower too?

NNPCL’s decision is thought to be driven by where the international pendulum swings but Dangote Refinery is achieving a different result, so how come is the question that marketers seem to be asking in a report captured by Punch News?

Findings by the newspaper interacting with different groups on the topic suggest that the situation may likely get worse if the NNPCL fails to remain competitive.

Nigeria’s downstream oil industry is witnessing a significant shift as independent marketers reconsider their supply sources. The Nigerian National Petroleum Company Limited (NNPC) has recently increased petrol prices, while the Dangote Refinery has announced a substantial price reduction, prompting marketers to explore cheaper alternatives.

NNPC’s price increase and marketers’ concerns

In Lagos, after NNPC raised petrol prices from ₦925 to ₦960 per litre, in Abuja, prices reportedly moved from ₦965 to ₦990 per litre. This increase has been attributed to fluctuations in global crude oil prices. However, independent marketers are feeling the pinch as they struggle to remain competitive with these higher prices.

The Dangote Refinery in contrast believes its own reduction will lead to a meaningful decrease in the cost of petrol nationwide, benefiting consumers and various sectors of the economy, and it is becoming obvious that distributors of the fuel are attracted to such gestures.

Now comes the voice of the Independent Petroleum Marketers Association of Nigeria (IPMAN) in an exclusive Punch News interview on Tuesday 4 February. Chinedu Ukadike is the national publicity secretary of the group and he has confirmed a growing change in their behaviour because of Dangote.

About if members are considering a switch from NNPCL being their main supplier of petrol, Mr. Ukadike said: Yes, that observation is correct.

The publicity secretary further emphasised that some marketers are changing and rebranding, meaning no longer placing the tricolours of Nigeria’s oil company at their doorsteps.

Remember that there was a time [when] NNPCL was the sole distributor and importer of petrol. So, marketers then gave their filling stations as franchises so that they could get products.

So marketers normally give their companies to NNPCL to be able to have petroleum products. But now that the game has changed, you can even see some marketers now changing to MRS filling stations. Because MRS is now selling cheaper than any other station.

Bar still high

Every depot price from the Dangote Refinery is welcomed by buyers at the filling stations but they still think the bar is still very high.

Many still have an illusion about the cost of petrol getting back to how it was -around ₦200 per litre – which was before President Bola Tinubu announced ending May 2023 that the PMS subsidy was gone.

With two formerly abandoned nationally-owned refineries, one in Port Harcourt and the other in Warri – back to functioning, Nigerians are thinking there is no reason they shouldn’t see a significant drop in the charges.

Reactions to Dangote reducing its asking price have helped gauge just how keen people are in seeking lower energy bills. Just enough to free their pockets and be able to afford other vital things.

Small, small, we will get to 250 per litre, the more you go low the more NNPCL will be forced to go lower. I love capitalism because it brings room for a competitive market and [in] the end, the consumers are the major benefactors, an X profile Miezy wrote.

NNPC’s decision to increase petrol prices has been driven by the global rise in crude oil costs it says, but the local consumers wonder about which part of the globe they are on.

With marketers now questioning why the company has not followed suit with Dangote’s approach, isn’t this a likely cause for concern because of losing vital market share?

Meiza Nigeria