Business
Marketers incur huge losses over Dangote Refinery’s price slash
Dump supply deal with NNPCL for cheaper Dangote PMS
Fuel marketers operating in the nation’s downstream petroleum sector have continued to incur huge losses as the pump prices of their refined petroleum products, especially Premium Motor Spirit (PMS), popularly known as petrol in Nigeria, become uncompetitive in the market on the back of the recent slashing of Dangote Refinery’s ex-depot price to N890 per litre.
According to Business Hallmark findings, volumes of petrol sold at NNPC-affiliated stations, as well at outlets owned by independent and major marketers relying on imported fuel have crashed by over 50 percent on the heels of Dangote Refinery’s price review.
Meanwhile, competitors like MRS, Ardova, Heyden and other marketers that get their supply from Dangote Refinery are benefiting from the loss of market share by NNPC-partnered stations and marketers that import fuel from abroad.
It would be recalled that the management of the 650,000 barrels per day capacity Dangote Petroleum Refinery in Ibeju-Lekki, Lagos, had on Saturday, February 1, 2025, announced the reduction of its ex-depot (gantry) price of petrol from N950 to N890 per litre.
Announcing the adjustment, the Group Chief Branding and Communications Officer of Dangote Group, Anthony Chiejina, said the strategic slash was a direct response to the positive outlook within the global energy and gas markets, as well as the recent reduction in international crude oil prices.
“Dangote Petroleum Refinery has reduced the ex-depot (gantry) price of Premium Motor Spirit, commonly known as petrol, from N950 to N890, effective from Saturday, 1st February 2025.
“This strategic adjustment is a direct response to the positive outlook within the global energy and gas markets, as well as the recent reduction in international crude oil prices.
“As part of Dangote Refinery’s unwavering commitment to transparency and fairness, this price revision reflects the ongoing fluctuations in global crude oil markets, as highlighted in the refinery’s statement on 19th January, when a modest increase was implemented due to the previously rising international crude oil prices”, Chiejina said in the statement.
The unexpected move, sources in the petroleum industry informed our correspondent, caught many operators by surprise, with the more expensive PMS purchased from NNPC Retail and tank farms owners unable to compete with Dangote fuel dispensed by MRS, Ardova, Heyden and others.
Before the new price regime by Dangote Refinery, a litre of petrol sold at private filling stations and NNPC-affiliated outlets across the country from N960 to N990.
While Dangote-partnered outlets and NNPC stations were selling a litre of petrol at N960 in Lagos and N990 in the Federal Capital Territory (FCT) and its environs, the product in stations owned by the Independent Petroleum Marketers Association of Nigeria (IPMAN), Major Energy Marketers Association of Nigeria (MEMAN) and Petroleum Products Retail Outlets owners Association of Nigeria (PETROAN) members sold at N970 to N1,030.
On January 27, 2025, just four days to the price slash by Dangote Refinery, MEMAN said in its monthly bulleting that the landing cost of petrol as of Friday, January 24, 2025, was N922.65 per litre.
According to MEMAN, the landing cost factored in various expenses, including shipping, import duties and exchange rates.
However, Dangote’s deft move resulted in the ex-depot petrol price of his petrol selling cheaper at N890 than the landing cost of imported PMS at N922.65 per litre at the end of January.
With the price adjustment by Dangote, fuel marketers partnering with the refinery immediately adjusted to the new price regime, selling for as low as N915 and N935 in their outlets
However, independent fuel outlets and NNPC-partnered stations’ PMS prices remained high at an average price of N980 nationally.
Many motorists and buyers, enticed by the lower pump prices of petrol offered by Dangote-partnered stations, have continued to flood the stations for their fuel needs.
The development, BH gathered, has forced most NNPC-partnered stations and others affected by the market loss to bring down the prices of their products.
During BH’s visit to fuel stations on Iju Road in Ifako-Ijaiye Local Government Area; New Oko Oba on the old Lagos-Abeokuta Road and Olaniyi/Olayiwola/Charity Road in Ijaiye-Ojokoro LCDA, and Oba Ogunnubi Street, Agege, Lagos, it was observed that Dangote-partnered stations like Ardova Plc (formerly AP) on Oba Ogunnubi Road, Agege and Old Lagos-Abeokuta Road were always filled with buyers looking for cheaper fuel, while NNPC-partnered stations were either devoid of their usual traffic or not selling at all.
BH also observed that only NNPC mega stations and MEMAN-owned outlets like Mobil, Total, and Enyo were selling at a reduced price of N970 to N990.
In the same vein, residents of the FCT and its environs experienced long queues at filling last week as all NNPC-franchised stations failed to open for business, which sources in the corporation blamed on logistical challenges. Only NNPC mega stations opened for business and were selling for N965.
Meanwhile, NNPC franchised stations in Zone 3, Life Camp, Kubwa, Lugbe, and Airport Road didn’t dispense fuel last week as they didn’t get any supply from NNPC.
Speaking on the development, the manager in charge of NNPC Life Camp Station attributed the disruption in supply to internal operational adjustments, assuring that the issue will be resolved next week (this week).
Our Correspondent, however, gathered that the shutdown is not related to any logistical challenge as claimed by the station manager, but caused by the decisions of NNPC franchised stations to abandon NNPC fuel, which is more expensive than Dangote’s.
Efforts to get the reaction of NNPCL’s spokesperson, Femi Soneye, on the development failed, as he did not respond to calls and messages sent to his line.
However, a source in the national oil company, who spoke on the condition of anonymity, said the corporation’s management is currently at a fix on how to handle the matter.
“Dangote blindsided them (NNPC management) with the unexpected decision to cut PMS price by over N50, making NNPC’s fuel to be more expensive.
“While Dangote is ramping up production and producing cheaper fuels, NNPC’s refineries are mostly inactive. Apart from that, they are not cost-efficient and can’t compete favourable with Dangote’s state-of-the-art refinery.
“The corporation has two options, either continue to sell at a loss by fighting a lost price war with Dangote, or swallow its pride by running to Dangote for help.
“If you notice, most NNPC-partnered stations in the FCT have canceled their franchise deals with the firm. Some have even changed their names from NNPC Retail to their original names.
“The situation will likely worsen in the days to come when Dangote’s cheap fuel starts to flood Abuja at N915 to N920 after factoring in other expenses like transport and logistics costs. Meanwhile, NNPC stations officially sell the same product at N965, while supplying bulk marketers at the rate of N955.
“NNPC’s products will continue to find it difficult to compete in the market as they come under increasing pressure in the face of fierce competition from Dangote’s cheaper and qualitative products”.
“The corporation is living on a borrowed life. There are now even suggestions that the firm should give its daily crude oil allocation meant for local production to Dangote Refinery to help refine at lower cost. It is either it (NNPC) adapt or die”, the source stated.
BH checks in Lagos and Ogun States confirmed the source’s revelation that several NNPC franchised stations operating in the states have ended their partnership with the national oil company in order to benefit from Dangote Refinery’s price slash.
It was observed that most filling stations on the ever-busy Lagos-Ibadan Expressway, starting from Warewa, Arepo, Asese, Ibafo, and Mowe that previously displayed the logo of NNPC Retail, have dropped the name.
In his reaction, the Independent Petroleum Marketers Association (IPMAN) confirmed that its members are already moving away from the NNPCL franchise for cheaper deals.
IPMAN’s spokesperson, Chinedu Ukadike, who made the revelation on behalf of the association, confirmed that marketers are rebranding and changing their companies’ name from NNPCL because the state-owned oil firm is no longer the sole supplier of fuel, and marketers would naturally embrace partnership that would yield more returns on investment.
“Some marketers are changing and rebranding. Remember that there was a time NNPCL was the sole distributor and importer of petrol.
“So, marketers then gave their filling stations as franchises so that they could get products.
“So marketers normally give their companies to NNPCL to have petroleum products. But now that the game has changed, you can even see some marketers now changing to MRS filling stations, because MRS is now selling cheaper than any other station”, Ukadike disclosed.