NNPCL Cuts Petrol Price to ₦860 as Fuel Price War Escalates

The Nigerian National Petroleum Company Limited (NNPCL) has reduced the pump price of Premium Motor Spirit (PMS) from ₦945 to ₦860 per litre in Lagos and ₦865 in Abuja. This move follows an earlier price cut by Dangote Refinery, sparking concerns over market competition and potential regulatory intervention.

Stakeholders Warn of Market Instability

Industry experts fear the ongoing fuel price battle between NNPCL and Dangote Refinery could lead to market distortions. Stakeholders argue that both entities are operating at a loss in an attempt to dominate market share. Many independent petroleum marketers, despite purchasing fuel at higher prices, have also reduced their rates to remain competitive—though their stations are losing customers to NNPCL and MRS outlets.

While NNPCL has yet to issue an official statement on the price reduction, analysts believe it is a strategic response to market pressures and an effort to alleviate financial burdens on Nigerians.

Oligopoly Concerns in the Downstream Sector

Energy expert Wunmi Iledare has criticized the competitive landscape, calling it an oligopoly in which just two dominant players—NNPCL and Dangote—are setting interdependent prices. According to Iledare, market efficiency is not just about lower prices but also about sustainability. He warns that relying on imported fuel instead of refining locally could destabilize Nigeria’s economy in the long run.

“The NNPC is using imported fuel to compete with Dangote instead of focusing on optimizing its own refineries. This weakens foreign exchange stability and could lead to macroeconomic issues,” Iledare stated.

Dangote Absorbs Losses to Sustain Lower Prices

Reports indicate that Dangote Refinery has been selling fuel at a loss to maintain lower prices. The refinery recently announced that it would absorb ₦16 billion in losses by refunding marketers ₦65 per litre for stock purchased during the pricing adjustment period.

Professor Adeola Adenikinju, President of the Nigerian Economic Society (NES), emphasized the need for regulatory oversight to prevent monopolistic market behavior. He called for policies ensuring fair pricing and competition, warning against strategies that could force competitors out of business.

“They must ensure that no player is using short-term price reductions to drive out competition and monopolize the market,” Adenikinju said.

Will Fuel Prices Drop Further?

As more private investors enter the refining sector, industry analysts predict that fuel prices may decline further. Professor Segun Ajibola of Babcock University believes that once Dangote Refinery reaches full operational capacity and other private refineries join the market, petrol prices could drop to pre-May 2023 levels within the next five to ten years.

“This is just the beginning. With more private investments, fuel prices could stabilize and become more affordable for Nigerians,” Ajibola noted.

Meanwhile, stakeholders are urging NNPCL to adapt to the evolving market landscape by improving operational efficiency and eliminating corruption. While competition between NNPCL and Dangote may pose risks to market stability, experts agree that, in the long run, lower fuel prices will benefit Nigerian consumers.