Petrol Price Hike Amidst Rising Competition and Fuel Import Surge

The Dangote Petroleum Refinery has resumed the sale of Premium Motor Spirit (PMS), popularly known as petrol, following a one-week halt in operations.

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However, the return comes with a higher ex-depot price of ₦850 per litre, up from the previous ₦820, a 3.66% increase that has reignited concerns about a looming nationwide hike in pump prices.

According to industry monitoring portal Petroleum pricing, the new rate became effective on Thursday as the refinery’s massive 650,000-barrels-per-day facility recommenced loading operations.

This price change has rattled the downstream petroleum sector, which is still grappling with market instability caused by last week’s sudden halt in loading activities.

Why Operations Stopped for One Week

The temporary suspension in operations was traced to an internal memo marked “Important Update on DPRP Collection Account for PMS”, which instructed marketers to immediately suspend all payments to the refinery’s gantry account.

“Please be advised that, effective immediately, all payments to the DPRP collection account for PMS gantry should be placed on hold,” the advisory read.

This unexpected directive effectively paused fuel loading, disrupting supply chains and causing price fluctuations nationwide.

While operations resumed this week, the Dangote Group has not issued any public statement on the price hike.

Industry analysts believe the increase is linked to global crude oil market shifts, as the refinery reportedly sources nearly 50% of its crude feedstock from the United States, making it vulnerable to international price volatility.

How Dangote’s Market Advantage is Fading

When the refinery began large-scale PMS supply earlier this year, it disrupted the market by offering competitive pricing that forced other depot owners and importers to lower their rates.

However, recent weeks have seen Dangote lose this price advantage. Competing importers such as Aiteo and Menj have been selling PMS at depot rates as low as ₦815 per litre, undercutting Dangote’s ₦850 and even the Nigerian National Petroleum Company’s (NNPC) ₦825.

Chinedu Ukadike, National Publicity Secretary of the Independent Petroleum Marketers Association of Nigeria (IPMAN), confirmed the trend:

“Depot owners are dropping their petrol prices. Some of them are selling at ₦815, some at ₦817, while Dangote is selling at ₦820. NNPC is still selling at ₦825; it has not dropped its prices yet.”

This price war has spilled over to the retail market. Some filling stations, especially independent marketers, are now selling petrol for below ₦860 per litre, while Dangote-linked stations like MRS and Heyden still retail between ₦865 and ₦875 in Lagos and Ogun States.

The Role of Fuel Imports

New figures from the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) reveal that despite Dangote’s massive refining capacity, Nigeria remains heavily dependent on imported petrol.

Data submitted to the Federation Accounts Allocation Committee (FAAC) shows that in May and June 2025:

• 71.38% of daily petrol consumption came from imports
• Dangote Refinery supplied just 28.62% of the nation’s fuel needs

This high level of import dependence limits Dangote’s ability to dictate market prices, especially when foreign suppliers can land products at lower costs.

Why Global Oil Prices Matter

Industry experts note that Dangote’s cost structure is directly linked to global crude prices because nearly half of its crude comes from the United States.

With U.S. benchmark oil prices recently rising due to Middle East tensions and hurricane-related production slowdowns, the refinery’s feedstock costs have increased.

 “When international crude prices rise, it directly affects Dangote’s landing cost for refined products,” explained a Lagos-based energy analyst. “That’s why ex-depot prices here are climbing, even without local cost changes.”

Potential Impact on Pump Prices Nationwide

The ₦850 ex-depot rate means retailers buying directly from Dangote will now face higher acquisition costs.

This could push pump prices upwards in the coming weeks, especially in areas far from coastal supply depots where transportation costs add another layer of expense.

Market observers predict that if other suppliers match Dangote’s rate, urban centres may see average pump prices climb to between ₦880 and ₦900 per litre, with remote regions exceeding ₦920.

Public Reaction and Economic Implications

Many Nigerians have expressed concern that the refinery, initially hailed as the solution to decades of fuel import dependence, is yet to deliver consistent price relief.

Social media discussions reflect frustration, with citizens questioning why petrol prices remain volatile despite having Africa’s largest refinery in operation.

Higher fuel prices could also worsen inflationary pressures, especially in the transport sector, where increased costs are quickly passed on to consumers through higher fares and goods prices.

Government’s Position

The Federal Government has yet to comment on Dangote’s latest price adjustment.

However, past statements from the Ministry of Petroleum Resources suggest a willingness to allow market forces to determine pricing in line with subsidy removal policies.

In June, President Bola Tinubu had reiterated that the refinery’s operations would take time to stabilise and that competition among suppliers was necessary to drive efficiency and eventually lower prices.

The Road Ahead for Nigeria’s Petroleum Market

Energy experts warn that until Dangote can consistently outcompete imports on price and volume, the market will remain fragmented.

Key steps identified for stability include:

1. Increasing Domestic Crude Supply: To reduce exposure to U.S. price volatility, more Nigerian crude needs to be allocated to local refining.

2. Improving Distribution Infrastructure: Better pipelines and inland depots could cut transport costs that inflate pump prices.

3. Regulatory Clarity: Transparent pricing mechanisms can help the public understand fluctuations.

4. Encouraging Alternative Fuels: CNG and electric vehicle adoption could reduce dependence on PMS entirely.

Conclusion

Dangote’s resumption of PMS sales at ₦850 per litre is a stark reminder that refining capacity alone cannot shield Nigeria from global oil market pressures.

Until import reliance drops significantly and domestic crude supply becomes more secure, pump prices will remain vulnerable to external shocks.