Chika Izuora, in this report looks at various opinions and perspectives shared in the transformational and business dynamics by key operators in the downstream sector which has been seen as enigma in some quarters.
The economy of Nigeria has largely been subsided in various ways for many years and specifically petrol subsidy that began in the 1970s and became institutionalised in 1977, following the promulgation of the Price Control Act which made it illegal for some products (including petrol) to be sold above the regulated price.
While the concept of subsidy itself is noble, its practice in Nigeria has been plagued with serious corruption and mismanagement.
Thirteen years after diesel was deregulated, kerosene subsidy was removed in 2016, but petrol subsidy proved to be the biggest challenge to successive governments.
On an annual basis, a substantial portion of the national inflow is committed to funding the subsidy scheme and there are good reasons for the astronomical growth in subsidy amount which include price of crude oil in the international market, volume consumed albeit debatable, and Naira devaluation.
In June 2022, the Nigerian National Petroleum Company Limited (NNPCL) disclosed that daily consumption of petrol rose to over 103 million litres per day and that at least 58 million litres were being smuggled. This means that smugglers and other West African countries benefit more from fuel subsidy than Nigerians.
However, in a daring move President Bola Ahmed Tinubu announced the removal of petrol subsidy.
He made that consequential announcement on May 29, 2023, to fully deregulate the petroleum product pricing.
The NNPCL subsequently increased the official pump price of petrol in its retail outlets to N1,030 per litre in Abuja from the N897 it announced on September 3 and from N855 to N998 in Lagos.
The move effectively put an end to Nigeria’s multi-decade wasteful petrol subsidy regime, at least for now.
Minister of Finance and Coordinating Minister of the Economy, Wale Edun,
later revealed that the country has saved $20 billion through the removal of the petrol subsidy and the adoption of market-based foreign exchange pricing.
“An amount of five per cent of GDP is what those two subsidies were costing,” Edun stated. “When there was a subsidy on PMS and on foreign exchange, they collectively cost five per cent of GDP. Assuming GDP was $400 billion on average, five per cent of that is $20 billion—funds that could now go into infrastructure, health, social services, and education.”
Attenuating Petrol Import
Numbers in terms of petrol consumption have continued to oscillate following the introduction of market reflective pricing regime.
According to the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) Nigeria consumes approximately 50 million litres of petrol every day and by its calculations if the local refineries were operating at its stated capacity, Nigeria would have seen imports drop to zero.
But the NMDPRA data shows that imports have dropped by 67 per cent from 44.6 million litres a day in August 2024, to 14.7 million litres by April 13, 2025. This is a significant improvement, but there is a gap and new questions about accountability. Why is there a mismatch between Aliko Dangote’s proclamations and the data from the regulatory audit?
This cannot be dismissed as a bureaucratic squabble. The refinery’s success is important to Nigeria’s economy.
For decades, Nigeria haemorrhaged scarce foreign exchange through petrol imports even as it exported crude oil. A functional refinery would save billions in subsidies, help stabilise the naira and redirect funds to much-needed infrastructure and social programmes. But missteps also have a high opportunity cost. Policymakers would operate from a place of misinformation, investors and the public would be in the dark, and the market dynamics would have long-term distortions. Worse, the interventions necessary to solve gaps would be delayed or never taken, argues experts.
The NMDPRA’s data also shows the sluggish progress of Nigeria’s NNPC refineries.
Despite the much-hailed revamp of the Port Harcourt and Warri refineries at great cost, too, they contribute a meagre 5-10 million litres daily. This underperformance tells the story of a systemic problem: the Nigerian refining sector, whether private or public, struggles with inefficiencies to make it the only player for Nigerians.
There are emerging views suggesting that the production vacuum sets the Dangote refinery as a saviour and a de facto monopoly in waiting.
There are no overnight monopolies. They emerge slowly, incrementally, dressed as necessity. The sheer scale of the Dangote refinery makes it a monumental achievement. But this dominance raises legitimate concerns. How can market fairness coexist with a player of this scale? Should a single private entity control such a sector as important as energy?
But again opinions differ as some say the Dangote refinery is both a triumph of ambition and a test of governance as the government has dilly-dallied between overzealous intervention and passive acquiescence.
As the debate continues Nigeria’s petrol imports further dropped by more than N2 trillion in the first quarter of 2025.
According to the National Bureau of Statistics (NBS), the nation’s fuel import bill plunged from N3.81 trillion in Q1 2024 to N1.76 trillion in Q1 2025, a 54 per cent year-on-year drop.
But beyond the numbers, this shift signals something deeper: a structural realignment in Nigeria’s petroleum economy and perhaps a long-awaited turning point in the nation’s industrial self-reliance.
At the heart of this transformation is the Dangote Petroleum Refinery, a $20 billion plant that has begun to reshape the country’s fuel supply chain.
By ramping up to roughly 85 per cent of its 650,000 barrels-per-day capacity, the facility is not just producing fuel but displacing foreign suppliers, redirecting capital flows, and creating ripple effects across inflation, trade, and fiscal planning.
From Q1 2020 to Q1 2024, the country’s petrol imports reportedly staggered from N732 billion to a peak of N3.81 trillion. This was a period marked by foreign exchange instability, subsidy burdens, and bloated government spending all worsened by Nigeria’s inability to refine its own oil.
With more petrol produced locally, Nigeria is spending fewer dollars sourcing refined fuel abroad. This relieves pressure on the naira and may help stabilise foreign reserves.
Aliko Dangote himself has hinted that the refinery’s effect on Nigeria’s energy ecosystem will go beyond cheaper fuel. Speaking after President Bola Tinubu’s recent visit, Dangote promised a “total overhaul of the downstream sector.”
Distributing Supply Beyond Nigeria
During a high-level visit to the state-of-the-art 650,000 barrels-per-day facility, the President of the Economic Community of West African States (ECOWAS ) Commission, H.E. Dr Omar Alieu Touray, declared the refinery a beacon of hope for Africa’s future, and a clear demonstration of what the private sector can achieve in the drive for regional industrialisation.
The delegation also included ECOWAS Commissioner for Infrastructure, Energy and Digitalisation, Sediko Douka; Commissioner of Internal Services, Prof. Nazifi Abdullahi Darma; Director of Private Sector/SME, Dr Tony Luka Elumelu; and Dr Touray’s Chief of Staff, Hon Abdou Kolley, among others.
“What I have seen today gives me a lot of hope, and everybody who doesn’t believe in Africa should come here. Visiting here will give you more hope because this is exactly what our continent should focus on,” Dr Touray remarked, visibly moved by the scale and sophistication of the facility. “We have seen something I couldn’t have imagined, and really the capacity in all areas is impressive. We congratulate Alhaji Dangote for this trust in Africa because I think you do this only when you have the trust, and he has a vision for Africa, and this is what we should all work to encourage.”
Dr Touray noted that the refinery, which produces fuel to Euro V standard, is critical for enabling the ECOWAS region to meet its 50ppm sulphur limit for petroleum products—a standard many imported fuels fail to meet, posing health and environmental risks across member states.
“We are still importing products below our standard when a regional company such as Dangote can meet and exceed these requirements,” he said. “The private sector must take the lead in ECOWAS industrialisation.”
The ECOWAS Commission president used the visit to call for stronger collaboration between governments and the private sector, stressing that policy decisions must reflect the real challenges and opportunities experienced by African industrialists.
“We believe our visit also serves as an opportunity to hear directly from Mr Dangote, about what the private sector expects from the ECOWAS community,” Dr Touray remarked, noting that as ECOWAS celebrates its 50th anniversary, the community is more committed than ever to bringing the private sector to the table—to listen to their perspectives and to understand how best to create an environment that works for them.
“We cannot continue to make decisions on behalf of the private sector from a distance. Visits like this provide us with first-hand experience and direct insight into the challenges they face—challenges that authorities and government officials must work to address,” he added.
Dr Touray said the time is ripe for the region to pursue an industrial strategy capable of addressing deep-rooted challenges such as youth unemployment, poverty, and insecurity.
“We often speak about poverty eradication and youth employment, but the government alone may not have the capacity to achieve these goals. Only the private sector can deliver the scale of impact required, and it is essential that we listen to them, understand how these objectives can be met, and identify the bottlenecks they face so that they can be effectively addressed. This is the only realistic path to creating jobs and fostering genuine prosperity across our economies,”he said
He pledged the Commission’s full support for enabling regional giants such as Dangote Group to access wider ECOWAS markets and urged other African nations to follow Nigeria’s example by building infrastructure that serves the continent, not just individual countries.
“Once again, I congratulate the Dangote Group and commit that ECOWAS Commission will do everything to open up the ECOWAS market for them, if not the entire African continent.”
Aliko Dangote, who led the ECOWAS delegation on a detailed tour of the facility, explained the challenges and milestones involved in bringing the world’s largest single-train refinery to life.
He reiterated his longstanding position that Africa’s continued dependence on imported goods is unsustainable and hinders economic sovereignty.
“As long as we continue importing what we can produce, we will remain underdeveloped,” Dangote said. “This refinery is proof that we can build for ourselves at scale, to global standards.”
He noted that the Dangote Refinery is fully equipped to meet the petroleum needs of Nigeria and the entire West African region, countering claims that the facility would not produce enough for local and regional demand.
“There have been many claims suggesting that we don’t even produce enough to meet Nigeria’s needs, so how could we possibly supply other West African countries? But now, they are here to see the reality for themselves and, more importantly, to encourage other nations to embark on similarly large-scale industrial projects,” he said.
Noting that Africa will benefit greatly by encouraging trade among its countries, especially through value addition to the continent’s abundant resources, Dangote stressed how the refinery has helped Nigeria to bring down the cost of refined products and production costs across many sectors of the economy.
“Last year, when we began diesel production, we were able to reduce the price from N1,700 to N1,100 at a go, and as of today, the price has crashed further. This reduction has made a significant impact across various sectors. It has supported industries, benefited those of us in mining, and provided vital relief to the agricultural sector. The effect has been far-reaching,” he said.
He also noted that Nigerians are benefiting from local refining as the price of petrol has dropped significantly compared to neighbouring countries.
“In neighbouring countries, the average price of petrol is around $1 per litre, which is N1,600. But here at our refinery, we’re selling at between N815 and N820. Many Nigerians don’t realise that they are currently paying just 55% of what others in the region are paying for petrol. We also have a much larger initiative in the pipeline, something we’ve not yet announced but Nigerians should know that this refinery is built for them, and they will enjoy the maximum benefit from it,” he said.
He emphasised that this price reduction is a direct result of local refining, which continues to improve fuel affordability while enhancing energy security and reducing dependence on imports.
Transforming National Petrol Distribution Landscape
With the acquisition of scores of distribution trucks Dangote Petroleum Refinery, has commenced a significant national initiative designed to transform Nigeria’s fuel distribution landscape.
Effective 15th of August 2025, the Refinery began the distribution of Premium Motor Spirit (PMS) known as petrol and diesel to marketers, petrol dealers, manufacturers, telecoms firms, aviation, and other large users across the country, with free logistics to boost distribution network.
To ensure smooth take-off of this scheme, Dangote Refinery has invested in the procurement of 4,000 brand-new Compressed Natural Gas (CNG)-powered tankers.
This phase of the programme will continue over an extended timeframe. The refinery is also investing in Compressed Natural Gas (CNG) stations, commonly referred.
This strategic programme is part of our broader commitment to eliminating logistics costs, enhancing energy efficiency, promoting sustainability, and supporting Nigeria’s economic development. It affirms our dedication to improving the availability and affordability of fuel, in support of broader efforts to strengthen the economy and improve the well-being of all Nigerians.
Under this initiative, all petrol stations purchasing PMS and diesel from the Dangote Petroleum Refinery will benefit from this enhanced logistics support. Key sectors such as manufacturing, telecommunications, and others will also gain from this transformative initiative, as reduced fuel costs will contribute to lower production costs, reduced inflation, and foster economic growth. Players in these key sectors and others can purchase directly from the Dangote Petroleum Refinery.
In addition, the refinery will offer a credit facility to those purchasing a minimum of 500,000 litres—allowing them to obtain an additional 500,000 litres on credit for two weeks, under bank guarantee.
This pioneering effort marks a major milestone in our vision to revolutionise Nigeria’s energy sector. Dangote Refinery is dedicated to ensuring that no place is left behind. Our goal is to provide equitable access to affordable fuel for all Nigerians, regardless of location, making energy more accessible and sustainable for everyone, wherever they may be.
It is expected to revitalise previously inactive petrol stations, thereby driving job creation, stimulating small and medium-sized enterprises (SMEs), increasing government revenue, improving fuel access in rural and underserved communities, and strengthening investor confidence in Nigeria’s downstream petroleum sector.
This initiative is inline with the Renewed Hope Agenda of His Excellency, President Bola Ahmed Tinubu, reflecting our shared commitment to economic progress, stability, and inclusive development. We sincerely thank the Federal Government for its continued support, especially through the Naira-for-Crude scheme, which has helped stabilise fuel supply amid global price volatility. It marks a major revolution in the midstream and downstream sectors and stands as a key example of President Bola Tinubu’s bold and reformative economic policies.
The Monopoly Fears
As the initiative kicks off, the Petroleum Products Retail Oupets Owners Association of Nigeria (PETROAN) quickly raised concerns about Dangote Refinery’s forward integration adoption, warning that it could lead to a monopoly in disguise and pose a significant job loss threat to Nigeria.
With a production capacity of 650,000 barrels per day, PETROAN argues that Dangote Refinery should be competing with global refineries, not operating as a distributor in the downstream sector. This massive refinery, one of the largest in sub-Saharan Africa, is expected to satisfy domestic fuel demand and export surplus products.
PETROAN has previously raised alarms about Dangote’s intentions to dominate the downstream sector, citing concerns that the company may leverage its market power to fix prices, limit competition, and exploit consumers, much like it has done in other sectors.
PETROAN warns that Dangote’s tactics may include a pricing penetration strategy, where they reduce prices to capture market share, with the ultimate goal of forcing other filling station operators to quit the market. This could lead to a massive shutdown of filling stations across Nigeria, resulting in widespread job losses.
The introduction of 4,000 brand-new Compressed Natural Gas (CNG)-powered tankers by Dangote Refinery poses a significant threat to the livelihoods of thousands of truck drivers and owners. While CNG trucks may offer a lower cost of transporting petroleum products, this shift could lead to widespread job losses in the industry.
Impact on Various Stakeholders:
The adoption of a forward integration strategy by Dangote Refinery will greatly affect various stakeholders, including, Modular Refineries as their operations and market share may be threatened by Dangote’s dominance.
This is argued will affect truck owners as that move may lead to job losses and reduced business opportunities may occur due to Dangote’s direct supply and CNG-powered tankers while many filling stations may be forced to shut down due to Dangote’s pricing penetration strategy and dominance.
In addition local suppliers of petroleum products may be negatively impacted by Dangote’s direct supply to end-users and telecommunications diesel suppliers would lose investment.
The Association feels that it is obvious that Dangote plans to gain full monopoly of the downstream sector, which would enable the company to exploit Nigeria’s petroleum consumers. This could lead to higher prices, reduced competition, and decreased economic efficiency.
The National President of PETROAN, Dr. Billy Gillis Harry, thus called on the Executive Director of the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) and the Minister of State for Petroleum to put in place price control mechanisms to prevent any form of monopoly. Dr. Harry emphasises that competition should always be encouraged to protect consumers and promote economic efficiency.
PETROAN raised key issues saying Dangote Refinery’s dominance could stifle competition and the and refinery’s operations could negatively impact employment opportunities and could lead to anticompetitive behaviours.
The PETROAN called for a competitive refining market environment, strengthening of regulatory agencies to monitor market behavior, ensure crude oil supply to local refineries among others.
