Nigeria's downstream oil sector is currently grappling with a severe crisis, as thousands of independent petroleum marketers and retail outlet owners are being forced to shut down their businesses. The primary driver of this turmoil is the unpredictable and highly volatile pricing of Premium Motor Spirit (petrol) by the Dangote Petroleum Refinery and other importers, leading to significant financial losses for many operators.
Industry figures paint a stark picture: over 4,900 petrol retail outlets have ceased operations, and countless independent marketers are scaling back their activities. This alarming trend follows the full deregulation of the downstream oil industry in October 2024 by the current administration, which removed fuel subsidies and effectively subjected pricing to market forces.
The Dangote Petroleum Refinery, a colossal $20 billion facility with a capacity of 650,000 barrels per day, has been a significant player in the market, but its frequent price adjustments have proven particularly disruptive. Reports indicate that the refinery has altered petrol prices about six times this year alone, with initial costs of N950 per liter gradually reducing to N835 between January and April 2025. While price reductions might seem beneficial on the surface, the inconsistency creates immense uncertainty for marketers who purchase products and transport them to their stations, only to find prices have shifted, often resulting in losses.
"PETROAN has over 7,000 retail outlets, and over 70 per cent of those outlets are closed and are out of business today," lamented Billy Gillis-Harry, President of the Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN).
This translates to approximately 4,900 retail stations owned by their members being forced to close. Gillis-Harry highlighted the difficulty in securing loans from commercial banks as a contributing factor, explaining that marketers "buy products from a supplier and then before you can get to your filling station, prices have either increased or it has been dropped for no justifiable reason." This volatility, he added, leads to a situation where "people are thrown out of business. So what choice do we have?"
To remain afloat, many struggling dealers are now resorting to unprecedented measures, including pooling resources to afford single truckloads of fuel. Instead of individual purchases, three or more marketers are combining funds, a clear indicator of the financial strain. Those without the necessary financial "war chest" have simply been forced to close their doors.
The crisis extends beyond retail outlets. Reports indicate that over 70 tank farm operators, representing 65% of the total 120 approved facilities, have ceased operations in the last two years. These once-bustling storage facilities now stand abandoned, as retailers increasingly bypass them in favor of direct trucking options, further disrupting the logistics chain.
Chinedu Ukadike, National Publicity Secretary of the Independent Petroleum Marketers Association of Nigeria (IPMAN), confirmed that their members are experiencing significant losses. He attributed much of the setback to "price instability, severe logistics and transportation challenges," noting that many trucks now endure transit times of up to three days.
A recent IPMAN review revealed that members have lost between N300,000 and N1 million per truck, depending on the quantity of products. "The uncertainty and disparity in price are always present in any liberalised market," Ukadike explained. "Once the price is not being regulated, you would experience inherent fluctuations, and this makes buyers careful of how many litres they would be buying because of speculations and a price drop."
Despite these overwhelming challenges, IPMAN, which boasts over 20,000 registered marketers, maintains a semblance of resilience. "We would continue to push and see how we can maintain our filling station and ensure service delivery to the nation," Ukadike affirmed.
However, he admitted, "marketers are no longer taking products in bulk; most of us now combine to buy products. You can have three marketers bring together funds to buy products. So instead of losing out and shutting down, marketers prefer to just combine money to buy a truck, and that is the way we are operating now. It is skeletal because of the deficit in our financial value.”
Industry players are urgently calling for robust economic buffers and more effective regulatory oversight to stabilize the market and shield their businesses from further shocks. Without such interventions, the current trajectory threatens to decimate independent players who form the backbone of Nigeria's fuel distribution network, potentially leading to widespread scarcity and further price hikes for consumers.
The battle for market share between dominant refiners and importers, in the absence of clear market signals and regulatory frameworks, is creating an environment where the smaller players are simply unable to compete and survive.