States urged to revive modular refineries amid monopoly fears
Stakeholders in Nigeria’s energy sector have called on state governments to accelerate investments in modular refineries as part of broader efforts to deepen competition in the downstream petroleum industry and reduce fears of market dominance.
The call comes amid growing concerns about the concentration of petrol supply in the country following reports that the Dangote Petroleum Refinery accounted for over 90 per cent of the petrol consumed nationwide in February.
Industry leaders argue that expanding refining capacity through modular refinery projects and rehabilitating dormant state-owned refineries would not only strengthen competition but also help moderate pump prices in the long term.
Growing concerns over dominance in petrol supply
Recent figures released by the Nigerian Midstream and Downstream Petroleum Regulatory Authority indicated that domestic refineries supplied approximately 36.5 million litres of Premium Motor Spirit (PMS) daily in February 2026.
The report also showed that petrol imports accounted for just about three million litres per day during the same period, bringing the total national supply to around 39.5 million litres daily.
With domestic refining responsible for roughly 92 per cent of the country’s petrol supply following the Federal Government’s decision to pause fuel imports, analysts say the development represents a major milestone for Nigeria’s push toward energy self-sufficiency.
However, the dominance of a single major refinery in the supply chain has raised concerns among some economists and industry stakeholders who fear that excessive concentration could limit competition and influence price dynamics.
Modular refineries seen as long-term solution
The Lagos Chamber of Commerce and Industry (LCCI) believes expanding refining capacity across the country remains the most effective way to address these concerns.
According to the chamber, encouraging the establishment of additional modular refineries and reviving idle state-owned facilities would create a more competitive environment within the downstream petroleum sector.
The Director-General of the LCCI, Dr Chinyere Almona, explained that Nigeria’s daily petrol consumption is estimated at between 50 million and 60 million litres.
She said meeting that demand sustainably would require multiple operational refineries rather than reliance on a single large facility.
Almona stressed that increasing the number of refining operators would naturally moderate prices through competition rather than government-imposed price caps.
Industry experts have repeatedly warned that direct price controls could distort the market and discourage investment in Nigeria’s energy sector.
Call for regulatory oversight without price control
Stakeholders insist that while government regulators must closely monitor the sector, introducing price controls could undermine the country’s newly deregulated fuel market.
Nigeria formally removed petrol subsidies in 2023, allowing market forces to determine pump prices.
Analysts believe reversing that policy could recreate the fiscal pressures and supply shortages that characterised the subsidy era.
Almona noted that regulators should focus on ensuring transparency and preventing anti-competitive behaviour rather than fixing prices.
She explained that petrol pricing should reflect key market fundamentals such as global crude oil prices, exchange rate movements, refining costs and distribution margins.
Such regulatory vigilance, she added, would help protect consumers without discouraging investment in refining infrastructure.
Economists warn against policy reversal
Members of the organised private sector have also cautioned the Federal Government against making permanent policy changes in response to short-term global market disruptions.
The National Vice President of the National Association of Small-Scale Industrialists, Segun Kuti-George, said rising petrol prices were largely driven by global geopolitical tensions rather than domestic market manipulation.
According to him, the current pressure on energy prices is linked to instability in the Middle East and tensions involving major global powers.
He argued that returning to subsidy policies would not address the root cause of the problem.
Instead, he advised the government to focus on expanding local refining capacity and encouraging new investors to enter the sector.
Temporary relief measures suggested
Economic analysts have proposed short-term measures to cushion the impact of rising fuel costs on citizens without disrupting long-term energy reforms.
Chief Executive Officer of Economic Associates, Dr Ayo Teriba, said governments should avoid making structural policy changes based on temporary geopolitical crises.
He suggested targeted relief programmes to support vulnerable households during periods of global energy price spikes.
Such interventions, he noted, could help ease the economic burden on Nigerians without undermining the deregulated fuel market.
Industry players demand lower regulatory costs
Some industry operators have also highlighted the need to review the multiple regulatory charges imposed on refiners and petroleum suppliers.
Dr Muda Yusuf, Director of the Centre for the Promotion of Private Enterprise, warned that excessive fees and administrative charges ultimately raise the cost of fuel production.
According to him, refiners operating in Nigeria face numerous levies that are eventually passed on to consumers through higher pump prices.
He advised the government to provide concessions and incentives that would encourage more private investors to build refineries across the country.
Nigeria’s path to energy security
Energy experts believe that developing a robust refining ecosystem remains critical to Nigeria’s long-term economic stability.
With multiple refineries operating competitively, the country could significantly reduce its reliance on imports while positioning itself as a petroleum supply hub for West Africa.
They argue that strengthening local refining capacity will also improve energy security, create jobs and attract further investment into the sector.
Ultimately, analysts say boosting supply through increased refining capacity remains the most sustainable way to stabilise petrol prices and ensure a more resilient energy market.
