This surge in foreign fuel supply comes amid claims by Alhaji Aliko Dangote, President of Dangote Group, that his $20 billion refinery is "fighting for survival." The development highlights a deepening rift between oil marketers and the Dangote Petroleum Refinery, with stakeholders citing increasingly unfavorable business conditions as a key factor driving the renewed reliance on imports.
Dangote's Concerns Confirmed by Import Surge
Two weeks ago, Aliko Dangote publicly voiced his concerns about the continued importation of petrol and the reluctance of major marketers to purchase in bulk from his refinery, despite its enhanced production capacity. He alluded to an ongoing "battle with entrenched oil cabals," a struggle he claimed began even before the refinery commenced full operations.
Recent findings from the Tanker Position Report, a document tracking oil tanker movements, obtained from Blue Sea Maritime, appear to confirm Dangote's fears. Between May 11 and May 20, 2025, a total of 370,000 metric tonnes of petrol were discharged at various depots across Nigeria. This translates to approximately 496.17 million litres of petrol, brought in by marketers utilizing scarce foreign exchange.
With an average landing cost of N879.48 per litre, these imports could have amounted to N436.37 billion. This substantial figure adds to the N2.42 trillion spent on PMS imports in the 70 days between March 1 and May 9, 2025, and the N4.51 trillion spent between October 2024 and February 2025.
Marketers Cite Unfavorable Terms and Pricing
Industry sources indicate that the current surge in imports stems from a growing friction between private fuel importers, depot owners, and the Dangote Petroleum Refinery. Many marketers are reportedly choosing to import Premium Motor Spirit rather than sourcing from the refinery, citing a combination of economic and operational challenges.
A key grievance revolves around the refinery's pricing model, which marketers deem uncompetitive compared to international import options. Additionally, unfavorable business terms and gantry loading limitations are reportedly pushing importers back towards foreign procurement.
This situation coincides with reports of reduced output from the Dangote Petroleum Refinery due to unscheduled maintenance, which has reportedly contributed to a bounce in West African import demand, causing the market to revert to European supplies. S&P Global Commodities at Sea data shows gasoline imports to Nigeria and Togo surged from around 200,000 barrels per day in January to over 300,000 barrels per day in March, and roughly 250,000 b/d in April, nearing Nigeria’s total national demand of approximately 300,000 b/d.
Togo has increasingly become a critical channel for Nigerian imports, with traders diverting growing volumes to the offshore Lomé market for transshipment onto smaller vessels. This trend is reportedly driven by financial incentives to reduce tax exposure and continue transactions in US dollars, contrasting with the Nigerian government's push for naira-denominated transactions. Favorable freight costs have also supported strong flows to West Africa, with Platts assessing the Clean Long-range UKC-West Africa rate at $22.68/mt on May 12, down from $28.25/mt the previous year.
Key Players in the Import Surge
Import documents further confirm the significant import volumes, with 370,000 metric tonnes imported within a nine-day period. Depots in Lagos, Warri, and Calabar are receiving these products, marking one of the highest weekly import volumes this year, despite ongoing foreign exchange challenges.
Pinnacle Oil spearheaded this surge, receiving 152,000 MT of petrol at its depot near the Lekki plant, accounting for nearly 49.60% of the week's nationwide PMS deliveries (208.83 million litres). Additionally, seven independent petroleum marketers collectively imported over 167 million litres of PMS during the review period. AA Rano contributed the largest volume among them with 40.23 million litres, followed by Sunbeth with 26.82 million litres. Other significant contributors include OBAT, Rainoil, Matrix, Prudent Energy, and Mainland (Calabar), each bringing in 20.12 million litres, highlighting the increasing role of private players in sustaining fuel supply amidst market pressures.
Three vessels carrying 56,000 MT are also expected to berth at the Lagos Apapa and Calabar ports today, Tuesday, May 20, 2025.
Marketers Weigh Options Amidst Volatility
Industry stakeholders suggest that this sudden surge in imports indicates marketers may be favoring direct importation over local sourcing, driven by potentially wider margins at the depot level and mounting supply pressures. Depot prices for PMS have reportedly seen recent surges, further complicating distribution and pricing across the downstream market. While exact figures remain fluid, marketers attribute these adjustments to landing costs and logistics.
Chinedu Ukadike, National Publicity Secretary of the Independent Petroleum Marketers Association of Nigeria (IPMAN), acknowledged that the full deregulation of the downstream sector allows marketers to freely source products. However, he noted that the "abnormal import surge is indicative that something is wrong in the sector," hinting at potential issues with the Dangote Petroleum Refinery’s pricing strategy.
Ukadike described the downstream petroleum market as a "battleground for survival," where marketers are constantly weighing their options between importing fuel and sourcing from the Dangote refinery. "If Dangote’s price is actually cheaper for those importers, I don’t think they would do so (continue importing). Those who are importing are essentially businessmen who also want to make a profit," he stated.
He further commented on the conflicting narratives, "The refinery has said it has enough petroleum products to meet local demand and take care of the needs of the country. But the NMDPRA has said Dangote has a shortfall in supply, and when the authority in the downstream sector has spoken, it reveals the true situation of things." He suggested that the import surge implies "something is wrong somewhere, and maybe Dangote is not giving Nigerians the actual cost of petroleum products, which has allowed marketers to import and still sell, and they are not running at a loss."
Retail Outlets Face Closure Amidst Instability
Billy Gillis-Harry, President of the Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN), painted a bleak picture, stating that over 70% of the association’s more than 7,000 retail outlets have ceased operations due to unsustainable conditions and a lack of pricing stability.
"Over 70 per cent of our retail outlets are closed and out of business today," Gillis-Harry disclosed. "And the reason is that we struggle to take loans from the banks, purchase products, and before we even get to our filling stations, prices have either gone up or been slashed without any justifiable reason.”
He warned that the current volatility leaves marketers vulnerable to losses, making it nearly impossible to plan or remain competitive, thus forcing many to seek alternative, more stable supply sources. "That situation has forced us to source products from those who can give us a soft landing, so we can recover and compete,” he explained.
Gillis-Harry expressed concern that Nigeria might be embarking on a risky experiment, drawing parallels to Indian oil magnate Mukesh Ambani's strategy of sustaining massive losses for long-term market dominance. "We fear that this might be the same kind of market experiment playing out in Nigeria,” he cautioned.
While commending the Dangote refinery's ambition, the PETROAN president emphasized that its success should not come at the expense of smaller market players already struggling for survival. "If that happiness results in me being thrown out of business, how do I foot my bills? What then is the happiness about?” he queried. He concluded that PETROAN members are left with no choice but to patronize fuel sources offering predictable pricing and reduced risk.
Business Conflict and Market Inefficiencies
Oil and gas expert Olatide Jeremiah confirmed the deepening business conflict between importers, depot owners, and the refinery. He noted that the refinery's massive gantry loading capacity has significantly reduced the market share of traditional fuel importers, intensifying competition.
"The gantry loading capacity of over 2,500 trucks daily at Dangote Refinery has diminished 50 per cent of the sales made by fuel importers," he stated. "Most of these importers now sell through their retail outlets just to stay afloat." Jeremiah asserted, "I can categorically tell you that there is a business conflict, and that’s why private depot owners and importers would rather continue importing than patronising the Dangote Refinery." He cited "unfair pricing, unfavourable business terms, and gantry loading constraints" as factors driving players back to importation.
He further pointed out that long-standing importers and depot operators, pioneers of the sector's liberalization, are leveraging their experience and global contacts to secure cheaper landing costs, thereby competing with Dangote.
Renowned energy economist Prof. Wumi Iledare raised concerns about structural inefficiencies in Nigeria’s downstream petroleum sector, describing it as "largely anticompetitive" and dominated by a few influential players battling for market share and profit. He argued that the Federal Government’s continued reliance on fuel imports to drive competition has exacerbated the situation, pressuring the naira, draining foreign reserves, and preventing pump price reductions despite falling crude oil prices globally.
"Reliance on imports to boost market participation has been counterproductive. It exerts pressure on the naira, depletes external reserves, and prevents petrol price reductions even when crude oil prices fall,” Iledare stated. He concluded that this dependency "highlights governmental inadequacies and exacerbates market problems, disrupting both efficiency and economic stability."
Iledare advocated for regulating the behavior of market participants and enforcing fair competition, rather than using importation as a market balancing tool. He recommended a strategic shift towards price modulation, particularly given the government’s current dependence on imports to maintain competitive pressure while domestic refining capacity, spearheaded by the Dangote Refinery, navigates integration challenges.