Eshiorameh Sebastian
A seismic price cut by the Dangote Refinery has ignited a brutal battle for dominance in Nigeria’s downstream petroleum sector, unleashing massive financial losses for importers, triggering a fierce regulatory dispute, and creating a stark divide between celebrating consumers and a besieged marketing industry.
The conflict was triggered by last Sunday’s announcement from the Dangote Petroleum Refinery of a dramatic N129 per litre slash in the gantry price of Premium Motor Spirit (petrol), cutting the ex-depot rate from N828 to N699.
While many Nigerians have welcomed the reduction as a “major relief” during the Yuletide, fuel marketers say they are “counting heavy losses,” forced to sell existing stocks purchased at higher prices below cost. The development has exposed “deep fault lines” in the deregulated market, “with winners and losers emerging almost simultaneously.”
The financial scale of the conflict is staggering. Findings show petrol importers are “on the verge of losing as much as N102.48bn monthly” after Dangote’s move. The refinery itself is “also projected to lose about N91bn in a month as a direct consequence of the price cut,” underscoring the intensity of the competition.
Aliko Dangote, President of the Dangote Group, has been defiant, vowing to enforce the new nationwide pump price of N739 per litre. He framed the strategy as a necessary battle for survival. “For the marketers, I pray, and I wish they would even lose more because I’m not printing money. I’m also losing money; it’s not that I’m making money,” Dangote said. He revealed the refinery lost about N60bn in November alone after a previous price cut.
“They want imports to continue. I don’t think it is right. They want to continue to dump imported petrol, so I must have a strategy of how to survive because £20bn of investment is too big to fail,” he stated, explaining his aggressive pricing. “We are in a situation where we will continue to play cat and mouse, and at the end of the day, somebody will give up. It is either we give up, or they will give up, and I don’t think I will give up.”
The shockwave hit the depot segment within days. Market checks revealed private depots in Lagos “slashed PMS prices by about 14 per cent,” with prices falling from an average of N828 to around N710 per litre to remain competitive.
Here in Abuja, some marketers have started selling at N890 to N900 from the N935 before the recent price cut by Dangote.
For filling station owners, the predicament is acute. Chinedu Ukadike, spokesman for the Independent Petroleum Marketers Association of Nigeria (IPMAN), described a split reality for marketers. “It is a welcome development. We marketers have since been anticipating that since crude prices and the exchange rate are stabilising, we should also gain meaningfully from the Dangote refinery as the largest producer of petroleum products in Nigeria, and it has come to pass,” he said.
However, he immediately outlined the severe downside: “Marketers will lose over N80bn on this reduction. We will lose more than N80bn… we will continue to lick our wounds as soon as the new product starts circulating in the market.” His message to importers with cargoes still on the water was stark: “For importers, I will wish them good luck because most of them who have imported petrol and whose cargoes are still on the waterways have not been discharged. I don’t know how they are going to manage it this time around. But I wish them good luck, and I will also recommend high blood pressure medicines for them.”
Billy Gillis-Harry, President of the Petroleum Products Retail Outlet Owners Association of Nigeria (PETROAN), called the N129 reduction a “big shock” to retailers. “The only concern we have is that we have members who have stocks of their last purchases that are not within that bracket. What are they going to do? How are they going to cope?” he asked.
The conflict escalated beyond commerce into a public clash with the regulator. Dangote accused the Chief Executive of the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), Farouk Ahmed, of “sabotaging the economy” by granting import licences despite sufficient local production.
He leveled a serious personal allegation, challenging Ahmed to “explain how he allegedly paid $5m for his four children’s secondary school education in Switzerland.”
The escalating “growing tension” prompted the House of Representatives Committee on Petroleum Resources (Downstream) to intervene. Committee Chairman Ikenga Ugochinyere said they summoned Dangote and the NMDPRA to “address the growing tension” threatening sector stability. “We can only find sustainable solutions when we identify the critical issues leading to this tension,” he said.
Amidst the battle, consumers see immediate relief. Dangote has mandated a nationwide pump price of N739 per litre, with MRS filling stations leading the rollout.
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