By Energy Worth
Nigeria is in the middle of a hard, unapologetic petrol price war, and it is being driven by one disruptive force: the Dangote Petroleum Refinery. For decades, the country depended almost entirely on imported PMS, with prices determined by global oil markets, shipping costs, and the dollar–naira exchange rate. That old order is now under attack. With its 650,000-barrel-per-day capacity, Dangote Refinery has entered the market aggressively, selling locally refined petrol at prices importers are struggling to match. The result is a brutal contest that is shaking the downstream oil sector to its core.
Dangote’s strategy has been simple and ruthless: cut prices and capture market share. Ex-depot prices have fallen sharply over the past year, forcing fuel importers and depot owners to either slash their own prices or risk being stuck with unsold stock. Many importers are now selling at a loss because their fuel, bought with scarce dollars, lands at a higher cost than Dangote’s locally refined PMS. This is not competition on equal footing; it is a financial endurance test, and not everyone will survive it.
For Nigerians, the immediate impact is positive and very real. Pump prices have fallen from the highs of N900 per litre seen after subsidy removal to significantly lower levels in many cities. Transport costs have eased, logistics pressures on traders have reduced slightly, and households that rely on petrol for generators are spending less. In a country battling inflation and declining purchasing power, cheaper petrol offers rare and visible relief. It also helps slow price increases in food and basic goods, since fuel costs feed directly into transportation and distribution.
However, the comfort comes with serious economic consequences that cannot be ignored. The most obvious risk is market distortion. Smaller importers and independent marketers are being squeezed out, not because they are inefficient, but because they cannot compete with the scale, financing strength, and vertical integration of a mega-refinery. If enough players exit the market, competition weakens. In the long run, fewer suppliers mean fewer price checks, and that could hand enormous pricing power to one dominant producer.
Also, Nigeria’s refining future is now heavily tied to a single facility. Any disruption — crude supply issues, foreign exchange constraints, operational shutdowns, or policy disputes — could quickly translate into scarcity and price spikes. Ironically, a price war meant to stabilize fuel costs could leave the country more vulnerable if alternatives disappear.
On one hand, lower petrol prices reduce inflationary pressure and free up disposable income, which can stimulate consumer spending. On the other hand, losses in the downstream sector threaten jobs, reduce tax contributions, and discourage investment in future refineries. Potential investors may think twice before committing billions to refining if they believe one dominant player can undercut prices until competitors bleed out.
There is also the foreign exchange angle. While local refining reduces fuel import bills, it does not automatically solve Nigeria’s FX crisis. Crude supply arrangements, dollar-denominated inputs, and inconsistent policies still tie local fuel pricing indirectly to foreign exchange realities. If crude is not reliably supplied in naira or if costs rise, today’s cheaper petrol could quickly become tomorrow’s expensive commodity again.
Commenting on the situation, economist Dr. Ayo Teriba described the price war as “a short-term win for consumers but a long-term test for market balance.” According to him, “Lower petrol prices are good for inflation and household welfare, but competition must be protected. If the market tilts too heavily toward one supplier, Nigerians may lose the benefits of choice, and prices could rebound once rivals are weakened or gone.”
In truth, this price war is not just about petrol; it is about power, structure, and control of Nigeria’s energy future. Nigerians are enjoying the gains today, but the sustainability of those gains depends on smart regulation, fair competition, and a deliberate effort to ensure that local refining does not turn into private monopoly. Relief at the pump is welcome, but without balance, it may come at a higher cost tomorrow.
