The recent dip in petrol prices across Nigeria has brought brief relief to motorists and households, but industry experts caution that the optimism may be short-lived, warning of potential risks in the oil downstream sector.
Two weeks ago, pump prices fell noticeably across the country. In Abuja and Lagos, the retail cost of petrol dropped to between N885 and N945 per litre, down from previous rates of N910 and N955, depending on location and filling stations. The development followed the federal government’s suspension of a planned 15 percent import duty on petrol and diesel, a move initially interpreted as a policy win for consumers.
Yet, the price reduction also coincided with Dangote Refinery’s November adjustment of its ex-depot price to N828 per litre from N877. By Monday morning, however, the ex-depot price had risen again to N854 per litre for Dangote Refinery and Pinnacle, and N860 per litre for other depot owners, highlighting the volatility behind the recent decline.
While consumers may celebrate the temporary drop, petroleum stakeholders fear the reduction is largely artificial and unsustainable. In exclusive interviews with DAILY POST, leaders from the Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN) and the Independent Petroleum Marketers Association of Nigeria (IPMAN) expressed deep concerns that the current pricing does not reflect true market dynamics.
Prices Misaligned With Market Reality, PETROAN Says
PETROAN President Billy Gillis-Harry described the lower pump prices as “not in any way guided by fair market pricing.” According to him, the decline neither mirrors supply-demand dynamics nor accounts for the actual costs of importing, refining, and distributing petrol.
“Petrol prices are not determined by market fundamentals,” Gillis-Harry warned. “Distorted markets always come with consequences. If this continues, many marketers may lack the capital to purchase products, which could trigger shortages and renewed price spikes.”
He urged the adoption of what he called “right sizing, right pricing, fair pricing, and honest value,” emphasizing that sustainable pricing should reflect real market conditions rather than temporary adjustments that only look beneficial on the surface.
Gillis-Harry also highlighted the sector’s increasing dependence on Dangote Refinery. “Everybody is walking towards price volatility guided by Dangote. This concentration is unhealthy for competition and long-term market stability,” he said.
Deregulation Exists Only on Paper, IPMAN Argues
IPMAN spokesperson Chinedu Ukadike pointed to structural flaws in Nigeria’s petroleum sector as a core problem. He noted that while the Petroleum Industry Act (PIA) officially deregulated the downstream market, true deregulation is undermined by the fact that only one major domestic refinery—Dangote Refinery—is operational, while government-owned facilities in Port Harcourt, Warri, and Kaduna remain inactive.
“In a fully deregulated market, prices should fluctuate according to competition, cost variations, and supply diversity,” Ukadike explained. “With only one active refinery, market forces are effectively weakened, leaving marketers vulnerable and consumers exposed to sudden price swings.”
He argued that functional state-owned and modular refineries would provide multiple supply sources, fostering competitive pricing and reducing the risks of volatility tied to a single supplier.
False Stability and Looming Risks
Economists call this scenario a “false equilibrium”—temporary price stability not rooted in genuine market fundamentals. PETROAN and IPMAN agree that relying on one refinery for refined products risks long-term disruptions, as marketers may soon struggle with capital constraints, and artificially low prices could threaten consistent availability.
Without structural reforms and the restoration of public refineries, Nigeria may face a cycle of fuel scarcity, abrupt price spikes, and continued supply disruptions.
Navigating the Way Forward
Nigeria’s petrol market currently operates in a fragile state: deregulated by law, yet functionally dependent on a single domestic refinery and imported products. The result is a sector where neither government oversight nor market competition is strong enough to guarantee long-term stability.
For now, lower pump prices offer temporary relief to Nigerians grappling with inflation and economic pressure. But industry experts caution that the country faces a choice: enjoy the illusion of cheap fuel today or secure a sustainable supply tomorrow. Until refining capacity is diversified, public refineries revived, and market competition strengthened, debates over petrol pricing are likely to remain a recurring national dilemma.