- Fuel importers and marketers also face losses as Dangote’s price reductions reshape Nigeria’s petroleum market.
The Dangote Petroleum Refinery is set to lose up to N32.5 billion from its 500 million litres stock of Premium Motor Spirit (PMS) following its recent price reduction, a move that has sent ripples through Nigeria’s fuel market. The refinery slashed its ex-depot price by N65, from N890 to N825 per litre, effective February 27, 2025, marking its second price cut this year.
The price reduction, aimed at easing the cost of living for Nigerians, comes after the refinery had previously lowered prices by N60 in early February and by N70.50 in December 2024. These adjustments have significantly impacted the market, with pump prices dropping below N900 per litre at many filling stations, including Nigerian National Petroleum Company Limited (NNPCL) outlets, which now sell at N860 per litre in Lagos.
However, the price cuts have come at a cost. With 500 million litres of PMS in stock, the refinery’s expected revenue from the sale of this volume has dropped from N445 billion to N412.5 billion, resulting in a N32.5 billion shortfall. Industry experts suggest that the refinery may recover some of these losses due to the recent decline in crude oil prices and the marginal strengthening of the naira against the dollar.
The ripple effects of Dangote’s pricing strategy are being felt across the sector. Fuel importers and marketers have lamented the consistent price reductions, which have forced them to sell below landing costs, eroding their profit margins. According to PUNCH, importers could lose an average of N2.5 billion daily and N75 billion monthly as a result of the latest price cut.
Marketers with old stock have also incurred heavy losses, as they are compelled to adjust their prices to remain competitive. Despite these challenges, Dangote’s price reductions have been widely praised by Nigerians, who have appealed for an expansion of the refinery’s retail network to make its products more accessible.
The refinery’s aggressive pricing strategy is gradually reshaping Nigeria’s petroleum market, making fuel importation less attractive and putting pressure on competitors to adapt. Market projections suggest that petrol prices could drop further to N800 per litre, as the landing cost now stands at N783.66, according to the Major Energies Marketers Association of Nigeria.
As Dangote continues to prioritize affordability and market stability, its actions are setting a new benchmark for the industry, even as stakeholders grapple with the financial implications of this bold approach.
