Petroleum pump price War

Petroleum pump price War Petroleum marketers in Nigeria have shown reluctance to further reduce the pump price of Premium Motor Spirit (PMS), commonly known as petrol, below ₦735 per litre, despite a recent price war triggered by the Dangote Petroleum Refinery’s price cut and growing competition in the downstream sector. The hesitation has sparked public debate, as motorists question why retail prices remain relatively high even after wholesale costs declined. Background: Dangote Refinery Sparks Price War The current situation followed a major development in December 2025, when the Dangote Petroleum Refinery reduced its ex-depot price of petrol to ₦699 per litre. This move was widely viewed as an attempt to stabilise fuel prices and encourage affordability across the country. Shortly after, selected filling stations—particularly outlets operated by MRS Oil and a few independent marketers—adjusted pump prices to around ₦739 per litre, down from earlier levels that exceeded ₦800–₦900 per litre. The reduction triggered intense competition, especially in Lagos, Ogun, and parts of the South-West. Why Many Marketers Are Refusing to Go Lower Despite these reductions, a significant number of marketers have declined to sell petrol below ₦735–₦800 per litre, citing several cost-related challenges. High Landing and Logistics Costs: Many marketers argue that petrol imported prior to the Dangote price cut still carries a landing cost above ₦760 per litre, making it commercially risky to sell below that threshold. Additionally, transportation expenses—particularly to inland and rural locations—further inflate operational costs. Bank Charges and Financing Pressures: Independent marketers largely depend on bank loans and credit facilities to purchase fuel. With rising interest rates and transaction charges, selling petrol at very slim margins could lead to losses, threatening business sustainability. Uneven Market Structure: Unlike large marketers with direct refinery access, smaller operators lack the scale and financial buffer to absorb short-term losses. As a result, many have opted to maintain higher pump prices rather than compete aggressively. Industry Response and Warnings The Independent Petroleum Marketers Association of Nigeria (IPMAN) has cautioned marketers that resisting market-driven price reductions could result in lost patronage. According to the association, competition—not regulation—now dictates petrol pricing following the deregulation of the downstream sector. Some marketers have heeded the warning, undercutting competitors by selling petrol slightly below the ₦739 benchmark to attract customers. However, others remain firm, insisting that cost realities differ across locations. For consumers, the situation has produced mixed outcomes. While some motorists benefit from lower prices at select stations, many Nigerians still purchase petrol at higher rates due to limited access to discounted outlets. Analysts say the price disparity may persist until older, high-cost fuel stocks are exhausted Energy analysts believe that petrol prices may gradually decline further if local refining output increases and logistics costs improve. However, until market conditions stabilise, pump prices are expected to remain uneven across the country. The refusal by many marketers to reduce petrol prices below ₦735 per litre highlights the complexities of Nigeria’s deregulated fuel market. While competition has introduced price flexibility, underlying cost pressures continue to shape pricing decisions—leaving consumers to navigate a fragmented retail landscape.