The bold step by the federal government to fully de-regulate the downstream sector has sparked a price war among players in the petrol industry.
It has also addressed the recurrent petrol shortages that have plagued Africa’s biggest economy for decades.
For years, petrol price hikes in Nigeria have been a politically sensitive issue. While many Nigerians feel the burden of rising prices at the pump, others argue that the move to full deregulation is bowing to common sense for a country that has witnessed everything wrong with regulating petroleum products’ supply and pricing regimes for decades.
BusinessDay’s findings show that full deregulation has increased competition among marketers, leading to better pricing for consumers and enhanced service delivery, enabling market forces to dictate prices and encourage increased production.
Read also: Inflation seen settling at 27.1% in 2025 on lower petrol price, FX stability
A BusinessDay survey shows that for the first time in recent decades, some marketers sell petrol at prices lower than NNPC retail outlets.
For instance, in Lagos and Abuja, some marketers sell at N900 per litre while the NNPC retail sells at N925/litre.
At one independent marketers’ station in Okota, Ago Palace Way, Lagos, petrol price was sold N900 per litre last week. Also, at the NNPC outlet at Apple Junction at Amuwo Odofin, Lagos, it was sold at N925/litre.
Similarly, in the Federal Capital Territory (FCT), NIPCO Plc sells petrol cheaper than NNPC retail outlets.
In Abuja, NIPCO Plc at Airport Road sells petrol at N920/litre while NNPC at Gudu market sells at N954/litre.
In Kano, Total Energy sells at N1,130 a litre. In Uyo, it sells at N1,149/litre. However, for A. A. Rano, the pump price is the same in the two cities – N1,150 per litre.
A senior oil executive in the downstream sector, who spoke with BusinessDay, expects that a major review of the policy will take place in April 2024 to gauge the policy’s effectiveness.
“This review will assess the effectiveness of the deregulation, analyse its economic impacts, and determine whether any adjustments are needed,” he said.
He added, “We must make sure subsidy does not crawl its ugly head back into the system.”
Competition to continue
Yemi Oke, a professor of energy, said the competition in the petroleum sector would continue.
“We have seen competitiveness in the petroleum sector, which is now driving the pump price of premium motor spirit (PMS) down south,” he said.
He added, “That is going to continue. Naturally, it is a question of demand and supply. Once supply outweighs demand, prices will go south.”
Read also: NCS, NMDPRA shut fuel stations over smuggling, offer cheap petrol
Willing buyer, willing seller
Further findings show that marketers are now negotiating petrol prices directly with the Dangote Refinery under a “willing buyer, willing seller” arrangement, aligning with practices for other deregulated products such as diesel and kerosene.
Ardova Plc and Heyden Petroleum entered into a bulk purchase agreement with the Dangote Petroleum Refinery, a move aimed at ensuring steady supply of petroleum products at affordable prices.
This development follows the similar pact between MRS Oil Nigeria Plc and Dangote Refinery, which lowered the petrol price to N935 per litre across all MRS Oil Nigeria’s stations nationwide, addressing the long-standing issue of price disparities between states.
BusinessDay’s findings further show that the bulk purchase agreement with Dangote Petroleum Refinery will enable both Ardova and Heyden to secure a reliable and consistent supply of petroleum products from the world’s largest single-train refinery, ensuring a stable supply of fuel at competitive prices, benefiting consumers across the country.
The arrangement ensures that the two firms will have access to a full range of refined products, thereby securing their operations with a reliable supply chain.
“This framework will see Ardova Plc offtake a full slate of petroleum products from the refinery. While Ardova Plc has been a significant off-taker of the refinery since its inception, this new framework will institutionalise a more robust relationship between the two companies to further enhance the emerging competitive landscape in the downstream oil and gas industry in the country,” an official statement from Ardova said.
A Bloomfield report titled, ‘The Nigerian Oil and Gas Sector: 2024 In Review and an Outlook For 2025’ predicted that full deregulation of the downstream sector would trigger new competition, force down the price of premium motor spirit (PMS) and increase supply this year.
It pointed at the partnership between the Dangote Refinery and MRS Oil Nigeria Plc, which has led to a reduction in the prices of petroleum products, as a pointer to the future trend.
The report outlined how full deregulation would attract more private-sector players and create a competitive market that could lower costs in the long term while ensuring stable supply chains.
With the removal of subsidies already impacting fuel prices, Bloomfield suggested that competition among marketers would be critical in determining fair PMS pricing.
Read also: Borno offers farmers subsidised petrol, sells at N600/litre
“Further, in 2025, with the increase of capacity by Dangote Refinery and the expected completion of the rehabilitation of government-owned refineries, Nigeria is poised to become a potential exporter of refined petroleum products,” it stated.
“A reduction or stoppage of the importation of refined petroleum products will positively translate to a reduction in the landing cost of refined petroleum products.”
Also, the report highlighted the positive implications for Nigeria’s domestic gas market. As deregulation encourages private investments, gas processing and distribution are expected to improve, supporting the country’s energy transition goals, it said.
It envisaged that there would be an increase in gas delivery to the domestic market.
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