Petrol Dealers Slash Prices Below Dangote Refinery’s Cost Amid Market Uncertainty

Amid growing market turbulence and intensifying competition, independent petroleum marketers across Nigeria have started slashing petrol prices below the cost price reportedly offered by the Dangote Petroleum Refinery. The move, which has sparked wide industry debate, is driven largely by weakening consumer demand, high operational costs, and the struggle to maintain market share.

In major cities including Lagos, Ibadan, Port Harcourt, and Abuja, pump prices have been observed to range between ₦560 and ₦580 per litre—below the ₦610 to ₦630 per litre range initially floated by Dangote for its refined products when the refinery began domestic supplies. Industry players suggest this pricing war is partly a reaction to underwhelming economic conditions and dwindling consumer spending power.

According to marketers under the Independent Petroleum Marketers Association of Nigeria (IPMAN), the price cuts are a short-term survival tactic. “We are caught between a rock and a hard place,” one Lagos-based marketer said. “Sales volumes have dropped significantly. People simply can’t afford fuel at the current rates, so we have to adjust if we want to stay in business.”

This pricing move appears to undermine the cost structure set by Dangote’s 650,000 barrels-per-day refinery, which began supplying the domestic market earlier this year with hopes of eventually eliminating Nigeria’s reliance on fuel imports. The refinery, considered Africa’s largest, had priced its petrol with international crude benchmarks and operational expenses in mind, which many assumed would stabilize the market and reduce costs long-term.

However, independent marketers claim they are sourcing petrol through various channels that give them slight cost advantages, including port depots that are still selling imported products. Some are reportedly blending locally refined and imported products or relying on inventories purchased before Dangote’s full distribution took effect.

Still, the implications of marketers underpricing Dangote are significant. It raises questions about the viability of Dangote’s business model in the current economic climate and whether the refinery can remain competitive without government intervention or regulatory enforcement to level the playing field.

The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) has yet to release a formal statement on the price disparities, but insiders say the agency is monitoring the situation closely. A senior official who declined to be named said, “We are watching price movements carefully. The concern is sustainability and fairness across the supply chain. If one major supplier can’t compete, it affects long-term market stability.”

Economic analysts warn that while short-term price cuts might offer relief to consumers, they could create distortions in the market. “This is reminiscent of the subsidy-era dynamics,” said energy economist Ngozi Olalekan. “If some retailers are selling below production cost, that’s not sustainable. It will either force producers to cut quality, delay investment returns, or eventually lead to scarcity if margins collapse.”

Consumer sentiment is mixed. While many motorists welcome the cheaper rates, they also express confusion about the inconsistency in pump prices from one station to another. In some areas, queues have begun to form at stations offering lower rates, suggesting a shift in buying behaviour based solely on price.

Meanwhile, the Dangote Group is reportedly reviewing its pricing strategy. Industry sources indicate the company is under pressure to re-evaluate its cost base, especially as its full distribution infrastructure is still being scaled up. The refinery, which is yet to operate at full capacity, aims to reach 700,000 barrels per day by December 2025 and eventually export refined products across West Africa.

Despite the current setback, a Dangote official who spoke on condition of anonymity maintained that the refinery is committed to long-term goals. “We are not here for a price war,” the official said. “Our aim is to offer Nigeria self-sufficiency in petroleum refining and gradually bring stability to the downstream sector. These early fluctuations are not unexpected.”

The Nigerian National Petroleum Company Limited (NNPCL), which holds a stake in the refinery, has also remained silent on the pricing dilemma. However, some market observers believe government-owned entities may eventually step in with policy actions to protect long-term investors in domestic refining.

As the price battle unfolds, stakeholders across the fuel distribution chain are calling for clarity in regulations and better alignment between supply sources and retail pricing. IPMAN has urged the government to convene a roundtable to address emerging challenges and create a stable pricing environment that supports both suppliers and end-users.

 

In the meantime, the average Nigerian consumer continues to navigate a landscape of fluctuating prices, economic strain, and logistical uncertainty. Whether this current pricing trend will persist or reset remains to be seen, but the episode has already revealed deeper fractures in Nigeria’s fuel supply and pricing system—fractures that the Dangote refinery alone may not be able to fix without broader systemic reforms.