Nigeria’s downstream petroleum market is sliding into a sharper phase of competition as several filling stations have begun selling Premium Motor Spirit, PMS, at prices below the N739 per litre benchmark associated with the Dangote Petroleum Refinery. The development marks a new turn in a price war that has been building since December, when the refinery made an aggressive move to cut prices and reset market expectations.
A survey conducted over the weekend shows that some independent and major retail outlets are now undercutting even MRS Oil, the refinery’s key retail partner that has been at the forefront of implementing Dangote’s pricing policy. The move underscores the growing pressure on marketers grappling with slim margins, rising financing costs, and intense competition for customers in a fully liberalised market.
Stations push prices lower
Findings by The PUNCH indicate that as of Sunday, NIPCO was selling petrol at N738 per litre, SAO filling stations at N735, while Akiavic offered PMS at N737 per litre. In Mowe, Ogun State, an AP filling station located beside an MRS outlet reduced its pump price to N736 per litre, drawing steady traffic from motorists.
This pattern is being replicated across several urban and peri-urban centres, particularly in Lagos and Ogun states, where station density is high and consumers are highly price sensitive. Retailers now monitor neighbouring outlets closely, sometimes adjusting prices within hours, to avoid being undercut. According to observations by correspondents, stations offering the lowest prices attract long queues, while those maintaining higher rates often see forecourts nearly empty.
Background to the price battle
The current price war can be traced to December 12, when the Dangote refinery announced a sharp reduction in its ex-gantry price of petrol, cutting it by N129 from N828 to N699 per litre. The decision came at a time when many marketers were still selling fuel sourced at higher import-related costs.
Soon after, Aliko Dangote, President of the Dangote Group, accused some marketers of planning to keep pump prices elevated despite the reduction. He vowed that the group would deploy its resources to ensure that consumers benefited from lower prices, particularly during the festive period.
“We are going to use whatever resources we have to make sure that we crash the price down. For December and January, we do not want people to sell petrol for more than N740 nationwide,” Dangote said at the time, adding that those attempting to keep prices high were undermining broader economic objectives.
Following this statement, MRS filling stations, supplied with Dangote refinery petrol, began selling PMS at N739 per litre. This quickly shifted consumer behaviour, with motorists boycotting outlets selling above that level. In several locations, MRS stations experienced long queues as demand surged.
Importers squeezed by costs
However, while Dangote’s pricing strategy initially put pressure on import-dependent marketers, the situation has evolved further. According to the Major Energies Marketers Association of Nigeria, MEMAN, the average landing cost of imported petrol stands at about N762.38 per litre, well above Dangote’s ex-gantry price. Despite this gap, many importers and depot owners have still lowered their pump prices to remain competitive, even when it means selling at or below cost.
Industry sources told The PUNCH that losses running into billions of naira have been recorded across the supply chain, affecting both importers and local refiners. An operator who spoke on condition of anonymity said the current pricing decisions are driven less by cost considerations and more by the need to protect market share.
“This is not about whether imported fuel is cheaper or better. It is simply a market strategy. Everyone is trying not to be left behind,” the operator said, stressing that there is no coordinated effort to target any specific company or refinery.
Why the development matters now
The deepening price war comes at a critical moment for Nigeria’s downstream sector, which was fully deregulated following the removal of petrol subsidies. With prices now determined largely by market forces, competition has become the primary tool for attracting customers.
Analysts say the current phase of undercutting highlights both the benefits and the risks of liberalisation. On one hand, consumers are enjoying lower pump prices, a rare relief amid high inflation and rising living costs. On the other hand, prolonged selling below cost could strain marketers’ finances, reduce investment in infrastructure, and eventually lead to market consolidation.
There is also a broader macroeconomic angle. Increased reliance on locally refined petrol, particularly from the Dangote refinery, has the potential to conserve foreign exchange by reducing imports. However, if importers are forced out too quickly, supply diversity could shrink, raising concerns about resilience in the event of disruptions.
Marketers warn of self regulation by the market
The spokesperson for the Independent Petroleum Marketers Association of Nigeria, IPMAN, Chinedu Ukadike, said the current environment leaves little room for operators who refuse to adjust prices. According to him, with bank loans attracting high interest rates, slow sales quickly translate into mounting financial pressure.
“We are in a situation where competition is determined by price. Patronage will follow pricing. Nobody is regulating you. You will regulate yourself. The market will regulate itself,” Ukadike said. He noted that the era when motorists queued only at Nigerian National Petroleum Company stations is over, adding that customers now gravitate to whichever outlet offers cheaper fuel.
Ukadike explained that once Dangote reduced its gantry price to N699 per litre, competitive pricing became inevitable. Marketers who fail to move, he said, risk seeing interest charges erode their capital.
Dangote refinery expands access
Meanwhile, the Dangote refinery has defended its pricing and supply strategy, arguing that it is designed to deepen market participation and improve efficiency. In a statement issued over the weekend, the refinery disclosed that PMS supply under its marketers’ arrangement began in October 2025 with an offtake volume of 600 million litres. This was increased to 900 million litres in November and further expanded to 1.5 billion litres in December.
According to the refinery, daily loading volumes since December 16, 2025, have ranged between 31 million and 48 million litres, depending on market demand. It said these figures are verifiable through depot and regulatory records.
To support smaller operators, the refinery said it reduced minimum purchase volumes from two million litres to 250,000 litres and introduced a 10-day credit facility backed by bank guarantees. These measures, it explained, are intended to boost liquidity, encourage wider participation, and reduce dependence on imported fuel.
The company also addressed concerns about a surge in petrol imports recorded in November, attributing it to import licences approved by the previous leadership of the Nigerian Midstream and Downstream Petroleum Regulatory Authority. According to the refinery, those approvals exceeded prevailing domestic demand and were unrelated to its operational capacity.
What to watch next
Industry watchers say the next phase of the price war will depend on how long marketers can sustain selling below cost and whether financing conditions ease. Any further reduction in Dangote’s ex-gantry price could intensify competition, while a rebound in global oil prices or exchange rate pressures could force a reset.
For now, consumers are the immediate winners. But analysts caution that the sector may soon face tough adjustments as operators reassess strategies, renegotiate financing, or exit unprofitable locations.
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