The Dangote oil refinery, a cornerstone of Nigeria’s energy landscape, faces a potential revenue loss of N32.5 billion (Nigerian Naira) on its existing 500 million litre stock of premium motor spirit (PMS), commonly known as petrol, due to a recent price reduction. This substantial loss stems from the refinery’s decision to slash the ex-depot price of petrol by N65, from N890 to N825 per litre. Prior to the price cut, the refinery had publicly announced holding over 500 million litres of petrol, valued at N445 billion at the then-prevailing price of N890 per litre. With the new price of N825 per litre, the same volume of petrol is now worth N412.5 billion, resulting in a N32.5 billion difference.
This price reduction marks the second such instance in 2025, following an earlier decrease of N60 per litre. Furthermore, in December 2024, during the holiday season, the refinery implemented a price reduction of N70.50 per litre, lowering the price from N970 to N899.50. The Dangote refinery has consistently emphasized its commitment to alleviating the cost of living for Nigerians, citing these price reductions as evidence of its efforts. The refinery also highlighted the positive impact of these price reductions, noting how they have stabilized the market and prevented the usual fuel scarcity and price hikes often experienced during holiday periods.
Despite the potential financial implications of these price cuts for the Dangote refinery, industry experts suggest that the recent decline in crude oil prices, coupled with the marginal strengthening of the Naira against the US dollar, could mitigate the losses. These factors could potentially reduce the refinery’s production costs, offsetting the revenue lost from the price reduction. The situation highlights the complex interplay of global market forces and domestic economic policies in shaping the profitability of large-scale industrial ventures like the Dangote refinery.
The Dangote refinery’s price reductions have not been without controversy. Fuel importers and marketers have expressed concerns about the impact on their businesses, reporting substantial financial losses due to the pressure to lower their own prices to compete. These importers argue that the Dangote refinery’s aggressive pricing strategy is making fuel importation less attractive and squeezing their profit margins. Estimates suggest that importers may be losing an average of N2.5 billion daily and N75 billion monthly as a direct consequence of the latest price reduction. Existing stocks held by marketers have also depreciated in value, compounding their financial challenges.
While Nigerians have largely welcomed the lower fuel prices, calls have emerged for the Dangote refinery to expand its retail network. Consumers are urging the company to increase the number of filling stations dispensing its products across the country to ensure wider access to the more affordable fuel. This reflects a broader desire for greater market competition and improved distribution networks to benefit consumers nationwide. This price reduction has had a ripple effect across the fuel market, with many filling stations lowering their pump prices below N900 per litre. Even the Nigerian National Petroleum Company Limited (NNPC) has adjusted its retail prices downwards, further intensifying the competition.
Market analysts anticipate a continued downward trend in petrol prices, projecting a potential drop to N800 per litre, as the landing cost of imported fuel now stands at N783.66 per litre, according to the Major Energies Marketers Association of Nigeria (MOMAN). This prediction suggests that the Dangote refinery’s pricing strategy is reshaping the dynamics of the Nigerian fuel market, potentially leading to a sustained period of lower prices for consumers. However, the long-term sustainability of such price reductions remains to be seen, particularly considering the volatile nature of global crude oil prices and currency exchange rates. The situation requires careful monitoring and analysis to understand the full implications for all stakeholders, including the refinery, importers, marketers, and ultimately, the Nigerian consumer.
