Competition Reshapes Nigeria’s Downstream Oil Sector
A major shake-up is unfolding in Nigeria’s oil sector as independent marketers begin abandoning their franchise deals with the Nigerian National Petroleum Company Limited (NNPCL) in favor of sourcing cheaper refined products from the Dangote Petroleum Refinery.
Investigations reveal that several filling stations, especially in Lagos and neighboring states, have started removing NNPCL logos and rebranding under private oil marketing companies. This shift is driven by intense competition following Dangote’s recent price cut on petrol (Premium Motor Spirit, PMS), which has made its products more attractive to dealers.
Oil Marketers Opt for Cheaper Fuel Sources
Previously, many independent marketers partnered with NNPCL under a franchise agreement, allowing them to secure a steady supply of fuel at a regulated price. However, with Dangote’s refinery now producing locally and selling at lower rates, these marketers see a better opportunity to increase profit margins.
The National Publicity Secretary of the Independent Petroleum Marketers Association of Nigeria (IPMAN), Chinedu Ukadike, confirmed that many marketers are now opting out of their NNPCL contracts.
“Yes, some marketers are rebranding. There was a time when NNPCL was the sole importer of petrol, and marketers partnered with them to secure fuel. But now, the game has changed. Many are switching to brands like MRS, which currently offers lower prices,” Ukadike explained.
A franchise license in the oil sector allows independent marketers to operate under a major brand like NNPCL, Mobil, or Total, often in exchange for supply privileges. However, with fuel now available from multiple sources at competitive prices, many marketers see no reason to continue paying franchise fees to NNPCL.
Dangote’s Price Drop Intensifies Competition
The Dangote Petroleum Refinery recently slashed its ex-depot petrol price from N950 to N890 per liter, a move that directly challenges NNPCL’s hold on the market.
According to oil and gas expert Olatide Jeremiah, the shift began after the removal of fuel subsidies in 2023. At the time, NNPCL controlled pricing, keeping petrol at around N500 per liter, despite an actual landing cost of over N700 per liter for independent importers. This forced many marketers to buy from NNPCL through expensive franchise deals.
“Marketers paid millions for NNPCL franchise licenses because it was the only way to get cheaper fuel. But Dangote’s arrival changed everything. The refinery sells to everyone without restrictions, making its prices more attractive. This is why marketers are dropping NNPCL,” Jeremiah explained.
More Marketers Expected to Exit NNPCL Deals
Recent data from the Major Energy Marketers Association of Nigeria (MEMAN) shows that imported petrol now costs N910–N939 per liter to land in Nigeria. This means Dangote’s locally refined fuel is significantly cheaper, making it the preferred option for dealers seeking higher profit margins.
The Chairman of the Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN) Lagos Chapter, Akinola Ogunyolemi, also confirmed that the trend will likely continue.
“Most filling stations are privately owned. If an NNPCL contract expires or if a better offer comes along, station owners can rebrand under another company like Mobil or Total. It’s purely a business decision,” Ogunyolemi stated.
The Future of Nigeria’s Oil Market
The rivalry between NNPCL and Dangote Refinery is shaping up to be a full-scale price war. Dangote’s decision to reduce prices was reportedly influenced by competition from private importers who found alternative cheaper sources of refined petrol.
With 633 million liters of petrol and diesel imported into Nigeria in January 2025 alone, despite local refining efforts, the battle for market dominance is far from over.
Industry experts predict that as competition forces prices down, consumers may benefit from lower fuel costs in the long run. However, NNPCL faces a critical challenge—either match Dangote’s pricing or risk losing more of its market share to independent marketers seeking better deals elsewhere.
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