NNPCL Under Pressure to Reduce Petrol Prices Amid Rivalry with Dangote Refinery
The Nigerian National Petroleum Company Limited (NNPCL) is facing mounting pressure to reduce the price of Premium Motor Spirit (PMS), commonly known as petrol, following a recent price cut by MRS Oil Nigeria Plc in partnership with Dangote Refinery. This development has sparked a price war in Nigeria’s downstream oil sector, with implications for consumers, marketers, and the broader economy.
On Monday, MRS announced a reduction in its pump prices to N925 per litre in Lagos, N933 in the South-West, N945 in the North, and N955 in the South-East. This marks a significant drop from the previous price of around N970 per litre. The move comes weeks after Dangote Refinery slashed its ex-depot price to N870 per litre from N970 on February 1, 2025.
Industry stakeholders, including the National President of the Petroleum Products Retail Outlet Owners Association (PETROAN), Billy Gillis-Harry, and the Spokesperson for the Independent Petroleum Marketers Association of Nigeria (IPMAN), Chinedu Ukadike, have expressed optimism that NNPCL will soon announce a price reduction to remain competitive.
Price War and Market Dynamics
The rivalry between NNPCL and Dangote Refinery has intensified since the latter began refining petroleum products locally. Dangote’s aggressive pricing strategy has forced NNPCL to reconsider its pricing model, as consumers and marketers increasingly opt for cheaper alternatives.
Gillis-Harry emphasized that NNPCL has no choice but to lower its prices. “It is not possible to see a product at a cheaper price and still go for NNPCL,” he stated. Ukadike echoed this sentiment, noting that the price war between the two giants will likely push NNPCL to reduce its prices further. “Once Dangote Refinery announces a price drop, NNPC will follow suit,” he said.
Limited Impact on Transportation and Food Prices
Despite the reduction in petrol prices, the cost of transportation and food prices has remained unchanged. Gillis-Harry attributed this to the weak purchasing power of Nigerians, which has dampened the expected ripple effect of lower fuel costs.
“The cost of transportation has not reduced in spite of the reduction of fuel at the retail market. That tells you that the purchasing power of Nigerians is very weak,” he explained. He called for increased investment in production activities such as farming, fishing, and technology to boost the economy and improve living standards.
Ukadike, however, believes the impact will be gradual. “The reduction will eventually affect transportation, goods, and services, but it will take time,” he said.
Concerns Over Frequent Price Adjustments
The frequent adjustments in petrol prices have raised concerns among industry players. Gillis-Harry warned that incessant price changes could destabilize the market and create uncertainty for marketers.
“Incessant price adjustments will affect petrol security. Marketers cannot sell below the cost price. It is completely impossible for someone to buy a product at N970 per litre and sell below the purchase price,” he stated. He also highlighted the challenges faced by marketers who purchased fuel at higher prices before the recent reductions, noting that they risk significant losses if forced to sell at lower rates.
Broader Implications for the Economy
The price war between NNPCL and Dangote Refinery underscores the shifting dynamics in Nigeria’s oil and gas sector. While consumers stand to benefit from lower fuel prices in the short term, the long-term implications remain uncertain.
Dangote Refinery’s entry into the market has disrupted NNPCL’s dominance, forcing the state-owned company to adapt to a more competitive landscape. However, the frequent price adjustments have created volatility, making it difficult for marketers to plan and manage their operations effectively.
Moreover, the lack of a corresponding reduction in transportation and food prices highlights deeper structural issues in the economy. Weak purchasing power, inflation, and inadequate infrastructure continue to limit the benefits of lower fuel costs for ordinary Nigerians.
As NNPCL considers a price reduction to counter Dangote Refinery’s competitive pricing, the broader implications for Nigeria’s economy cannot be ignored. While lower petrol prices are a welcome development, they must be accompanied by policies that address underlying economic challenges, such as weak purchasing power and inflation.
The ongoing price war also underscores the need for a more stable and predictable pricing framework in the downstream sector. Without such measures, the gains from lower fuel prices may remain elusive for the majority of Nigerians, and the volatility in the market could undermine long-term growth and stability.
For now, all eyes are on NNPCL as it navigates this new competitive landscape, balancing the need to remain relevant with the broader goal of ensuring energy security and economic stability for the nation.
Reference
NNPCL Under Pressure to Reduce Petrol Prices Amid Rivalry with Dangote Refinery