Between late 2025 and early 2026, the Nigerian petrol market has begun to gradually feel what seems like the effect of deregulation, with the rising competition among marketers triggered by the entry of Dangote Refinery.
The 650,000 barrels per day refinery, which began operations in 2024, has significantly ramped up production, challenging the long-standing import-based system and the pricing dominance by the Nigeria National Petroleum Company Limited (NNPCL).
The competition has led to what is described as a “price war” between major industry players.
Is it a Win for Consumers?
While this looks like a win on paper, the reality for the Nigerian consumer is a mix of relief and lingering economic pressure. Economists and industry experts highlighted the current positive impacts and lingering concerns for the long term.
Price Reductions
Following the total deregulation of the market, after the removal of subsidies, and the entry of Dangote Refinery, there is rising competition, leading to a downward trend in petrol prices.
Dangote, which began production of premium motor spirit (PMS), also known as petrol, in September 2024, has reduced import dependency and triggered repeated price cuts, forcing all market players, including the NNPCL, to adjust prices frequently to retain customers. In December 2025, the $20 billion facility slashed its ex-depot price from ₦828 to ₦699 per litre, representing about a 16 per cent decrease or ₦129 per litre of the product. The new gantry price, which took effect on December 12, 2025, marked the 20th petrol price adjustment announced by the refinery in the year alone. The refinery’s distribution partners, such as MRS, reduced the pump price to ₦739 per litre.
Recent data released by the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) shows that petrol consumption rose by 20.42 per cent from 52.9 million litres per day in November to 63.7 million litres per day in December 2025. The NMDPRA Fact Sheet shows that though petrol supply through import still dominated at 42.2 million litres in December (an almost 20 per cent reduction from 52.1 million in November), that of domestic supply saw an increase from 19.5 million litres to 32 million litres in one month. The December figure for domestic petrol supply has become the highest since September 2024, when local refining of petrol resumed in Nigeria after decades.
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Analysts observed a significant correlation between the rise in domestic supply and the drop in the price of petrol over 12 months. In late 2024, petrol prices peaked at over ₦1,200/litre in some areas. When compared with the current drop to between ₦739 and ₦900 levels in many outlets across the country, it represents a significant cooling of energy costs.
Some observers have said that with the current trend in the downstream, the NNPC’s competitive position against the Dangote Refinery has fundamentally shifted from being an import-dependent market leader to a strategic player in a new market structure. The competition has dramatically altered consumer behaviour. Many NNPCL retail outlets, traditionally known for the longest queues due to lower prices, are seeing those queues shift to independent marketers offering the Dangote-sourced product. After the price slash by Dangote and its partners, NNPCL struggled for over a month to match that price. It initially reduced its average pump price to around ₦830 per litre, before recently dropping to ₦739 in parts of Lagos.
While briefing newsmen after a meeting with President Tinubu in late December in Lagos, the Group Chief Executive Officer of NNPCL, Bayo Ojulari, assured that the intensifying competition will be to the benefit of consumers.
Reacting to Dangote Refinery’s price cut, Chief Economist at SPM Professional, Dr Paul Alaje, highlighted the impact of lowering transport and logistics costs and easing pressure on household budgets. He maintained that if the price is sustained and reflected at the pump, it could contribute to moderating inflationary pressures, particularly food inflation.
Alaje stated that for long, Nigeria has lacked competition in the supply of refined fuel, adding that the price slash by Dangote is a sign that true competition has finally arrived.
While stating that the resurgence of domestic refining and the consequent price drop is good for Nigerian consumers, the economic expert observed that the country’s dependence on imported refined products over the years has undermined its fiscal stability, weakened its currency, and exposed its markets to global volatility. “A domestic refinery adjusting prices downward — based on internal considerations and market realities — is a clear demonstration that we are gradually taking back control of our energy future,” Alaje stated via his X handle recently.
Some Nigerians expressed excitement over the price war.
“Dangote Refinery has boosted domestic petrol supply by 64% as fuel imports decline. Quietly and decisively, without any new law from the Federal Government, Dangote is steadily ending fuel importation, a major win for Nigeria’s economy and energy security,” public commentator, Bolaji Fesomade, stated via X.
“Dangote initially aimed to lower fuel prices for Christmas and the New Year. Now that the festive season is over, private depots have also reduced prices, prompting Dangote to maintain theirs. Once BUA and NNPC refineries go live, we could see fuel at ₦300/litre without subsidies,” another X user stated.
While some believe that the drop in petrol prices has had a significant effect on the Nigerian economy, others observed that it is being felt unevenly.
Financial expert, Muktar Mohammed said the reduction in price is only to the advantage of those who have cars and buy fuel, as those using public transport are still paying high fares. Mohammed, who appeared on Arise News Business Week over the weekend, called for a review of fares charged by public transporters so that the petrol price reduction can have an effect on the lives of ordinary Nigerians.
Ebikabowei Aduku, an economist and lecturer at the University of Africa Toru-Orua (UAT), Bayelsa State, described what is going on between Dangote Refinery and major oil marketers as “correction of market imperfection” – trying to move from a monopolistic system (orchestrated by NNPC) to a perfectly competitive system (due to deregulation).
He noted that the deregulation has eliminated fuel scarcity as consumers no longer spend hours in queues or pay higher buying from black market operators.
While agreeing that the development has led to a reduction in retail prices of petrol across the country, Aduku expressed concern that it has not translated into a significant reduction in the cost of transportation.
He recalled that while travelling from Bayelsa to Enugu on December 14 (before the festive season), he paid N14,000, but spent N23,000 travelling the same distance in early January, barely two weeks after.
“Currently, I must say, there is no significant impact in terms of transportation cost reduction across the country,” Aduku stated in a chat with Pinnacle Daily over the weekend.
Though petrol prices have dropped, they remain over 300 per cent higher than they were before the May 2023 subsidy removal (when petrol was around ₦190 per litre). The cost of food and transport has sticky high prices that haven’t dropped in correlation with the fuel price.
In rural areas and the far North, logistics costs mean many consumers still pay closer to ₦950 per litre, missing out on the “price war” benefits seen in places like Lagos or Abuja.
While noting that transport cost is one of the major drivers of inflation in the country, Aduku called for strategic measures by the government to provide alternative mass transit buses and force private transport operators ripping off the people to bring down their fares.
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The university don also echoed the long-term effect of the development in the Nigerian petroleum market on the economy, such as rising supply of domestically refined fuel, export and reducing imports.
He, however, warned that the struggle between NNPC and Dangote Refinery could lead to a return to monopoly and hike in prices if any of the sides wins dominance of the market.
Looking Ahead — What Nigeria Must Do Next
Aduku called on industry regulators to watch closely and ensure that the ongoing price war leads to a perfectly competitive market. This, he said, can be achieved by allowing other competent private investors to come in and play.
“If NNPC wins the fight, we might go back to pure monopoly. If Dangote wins the fight and takes control of the market, then we would move from public to private monopoly,” he stated.
“The managers of the industry should monitor and ensure that a perfectly competitive system is established,” he further advised.
Industry observers stated that the current tension is part of a major transition and averred that the only way the competition can be sustainable and benefit the consumers in the long-term is if prices stabilize at a cost-reflective level that allows all efficient players to remain in the market.
They also called for strong oversight by the NMDPRA to prevent anti-competitive practices and ensure a level playing field as the market matures.
On his part, Alaje highlighted what the government must do to sustain the current development in the downstream petroleum market. According to him, these include ensuring transparent regulation of downstream activities, adequate supply of crude to domestic refineries, efficient distribution networks, competitive pricing strategies adopted by marketers, incentives promoting local refining nationwide and clear governmental policies on energy diversification.
“Dangote cannot shoulder the entire sector independently. His refinery has heralded a new era; it now falls upon policymakers, investors, and enterprises to sustain this momentum,” Alaje added.
Victor Ezeja is a passionate journalist, scholar and analyst of socioeconomic issues in Nigeria and Africa. He is skilled in energy reporting, business and economy, and holds a master's degree in mass communication.
