Nigeria’s downstream petroleum industry is facing renewed tension as marketers and energy stakeholders debate the Federal Government’s decision to halt petrol import licences amid rising pump prices linked to global oil market volatility.
The disagreement intensified after Dangote Petroleum Refinery increased its depot price of Premium Motor Spirit (PMS), commonly known as petrol, triggering uncertainty among marketers already grappling with supply adjustments in a market transitioning from heavy import dependence to local refining.
Industry observers say the development reflects the broader restructuring currently underway in Nigeria’s energy sector, where domestic refining capacity is gradually reshaping the country’s long-standing fuel supply chain.
Petrol import ban divides marketers after Dangote hikes price
The debate over the policy has become more intense following reports that petrol import ban divides marketers after Dangote hikes price, raising concerns about supply sufficiency, market competition, and potential pricing implications.
Market data indicates that the refinery recently reviewed its ex-depot price upward to ₦1,175 per litre, reversing a reduction earlier announced during the week when the price briefly dropped to ₦1,075 per litre.
The revision also affected the refinery’s coastal supply price, which climbed from ₦1,378,548 per metric tonne to ₦1,512,648 per metric tonne, reflecting the rising cost of crude oil in international markets.
Sources within the refinery attribute the adjustment largely to the surge in global crude prices, which has increased refining costs worldwide.
Energy analysts note that fluctuations in benchmark crude prices—particularly Brent Crude—have pushed refining margins higher, forcing refiners to revise fuel prices in response to market dynamics.
At the peak of recent volatility, Brent crude rose above $100 per barrel, driven partly by geopolitical tensions involving Iran, Israel, and the United States, which have heightened fears of supply disruptions in global energy markets.
Temporary disruption in depot trading
The sudden price adjustment created confusion across several petroleum depots, where traders paused transactions while awaiting clarity on the new pricing structure.
Industry sources said some depot operators suspended sales temporarily as marketers attempted to recalculate costs and adjust distribution strategies under the revised price regime.
Loading operations at the refinery were also briefly halted to reconcile stock levels and align supply with the new pricing framework.
Energy market analysts say such disruptions are common during major price revisions, especially in a market undergoing structural change like Nigeria’s downstream sector.
Import licence suspension sparks disagreement
While the price adjustment unsettled trading activities, the bigger controversy has centred on the Federal Government’s decision to suspend petrol import licences for the first quarter of 2026.
Officials from the Nigerian Midstream and Downstream Petroleum Regulatory Authority confirmed that no import licences were issued during the period, citing the growing contribution of domestic refineries to national fuel supply.
The regulator’s latest industry data shows that local refining accounted for approximately 92 per cent of petrol supply in February.
Figures released in the authority’s industry fact sheet indicate that domestic refineries supplied about 36.5 million litres per day, while imports contributed roughly three million litres daily, bringing total supply to about 39.5 million litres per day.
However, marketers remain divided over whether local production alone can meet Nigeria’s estimated consumption demand.
Independent marketers back local refining
Some industry groups, particularly the Independent Petroleum Marketers Association of Nigeria, have expressed support for the government’s policy of prioritising domestic refining.
According to the association, the emergence of large-scale refining facilities such as the Dangote refinery represents a major step toward reducing Nigeria’s dependence on imported fuel.
Industry representatives argue that supporting local refining will strengthen energy security, reduce foreign exchange pressure, and stabilise supply in the long term.
They also point out that global geopolitical tensions could have pushed petrol prices far higher if Nigeria still depended largely on imported fuel.
Major marketers question supply gap
However, several major fuel importers and large-scale marketers have raised concerns about the policy, arguing that domestic production may not yet fully cover national demand.
Industry data cited by some dealers suggests that Nigeria’s daily petrol consumption could reach around 56 million litres, creating a potential supply gap if local refineries produce about 36 million litres daily.
According to these marketers, the difference between supply and demand suggests that imports may still be necessary to stabilise the market.
They warn that eliminating imports entirely could reduce competition and increase the risk of market dominance by a single major supplier.
Market restructuring underway
Despite the disagreements, most analysts agree that Nigeria’s fuel supply structure is undergoing one of its most significant transformations in decades.
For years, the country relied heavily on imported petroleum products due to limited domestic refining capacity despite being one of Africa’s largest crude oil producers.
The commissioning of the 650,000-barrel-per-day Dangote refinery has dramatically altered that landscape.
Industry experts say the facility has already begun reshaping supply patterns, gradually reducing Nigeria’s dependence on imported petrol.
However, they caution that the transition to full domestic supply may take time as local refining capacity continues to ramp up.
Global oil volatility adds pressure
The debate over fuel imports has also been influenced by broader developments in global oil markets.
Escalating geopolitical tensions in the Middle East have raised concerns about potential disruptions in the Strait of Hormuz, a strategic shipping route responsible for transporting nearly 20 per cent of the world’s crude oil.
Such disruptions could push global oil prices even higher, increasing the cost of refining and fuel distribution worldwide.
Energy economists say Nigeria’s shift toward domestic refining may help cushion the country from some of these external shocks.
Nevertheless, they emphasise that ensuring a balanced supply system—combining domestic production with strategic imports where necessary—may be essential for maintaining stability in the country’s fuel market.
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