Petrol Price Wars: Competition Trumps Refining Costs in Nigeria's Fuel Market

Nigeria's petrol pricing system has undergone significant changes, with competition and market forces playing a more crucial role in determining fuel prices. An in-depth analysis of gantry prices and import landing costs reveals that petrol prices are now more responsive to international crude oil movements, exchange rate fluctuations, and import parity. The commissioning of the Dangote Petroleum Refinery was expected to reduce Nigeria's dependence on imported fuel and lower prices. However, the refinery's entry into the market has not automatically led to pricing dominance. The downstream sector is shaped by a complex interplay of importers, depot owners, and marketers, with international crude prices and exchange-rate movements influencing the market. Aliko Dangote, the refinery's founder, has acknowledged the challenges faced by the refinery in its first year of operation, citing resistance from entrenched interests and accusing international traders and local marketers of working together to sustain fuel imports. Despite these challenges, the refinery has significantly expanded domestic supply, but the promise of consistently cheaper petrol has yet to materialize. Official data from the National Bureau of Statistics shows that the average retail price of petrol has risen by 54.88% since September 2024. An analysis of gantry prices and import landing costs reveals a competitive market, with Dangote's gantry price exceeding imported petrol in 52.57% of the sample observations.