NNPCL poised for fresh fuel price cut as Dangote Refinery sparks price war

The Nigerian National Petroleum Company Limited (NNPCL) is considering a fresh reduction in the price of Premium Motor Spirit (PMS) following a major price cut announced by MRS filling station in collaboration with Dangote Refinery.

This move signals a new phase in the ongoing price competition between NNPCL and Dangote Refinery in Nigeria’s downstream petroleum sector.

On Monday, the National President of Petroleum Products Retail Outlet Owners Association (PETROAN), Billy Gillis-Harry, and the Spokesperson for the Independent Petroleum Marketers Association of Nigeria (IPMAN), Chinedu Ukadike, confirmed this development, expressing confidence that NNPCL will follow suit with a price reduction.

MRS filling station, in an official statement via its X (formerly Twitter) account, disclosed that its pump price had dropped to N925 per litre in Lagos, N933 in the South-West, N945 in the North, and N955 in the South-East.

READ ALSO: Legal battle intensifies as Dangote Refinery, FCCPC clash over N100bn import license lawsuit

This represents a decline from the previous N970 per litre charged by the company. The development comes weeks after Dangote Refinery announced a drop in its ex-depot price to N870 per litre, down from N970, effective February 1, 2025.

Experts Predict Further Price Drops by NNPCL

Industry experts have weighed in on the implications of the price reductions, asserting that NNPCL is under pressure to adjust its pricing strategy.

According to Gillis-Harry, “NNPCL has no choice but to reduce petrol retail prices because it is not possible to see a product at a cheaper price and still go for NNPCL.”

Similarly, Ukadike noted that the persistent price battle between Dangote Refinery and NNPCL would inevitably lead to a price drop. “It is likely that NNPCL will drop its price because there is a price war with Dangote Refinery. Once Dangote Refinery announces a price drop, NNPCL will follow suit,” he said.

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Why Petrol Price Reductions Are Not Affecting Transportation Costs

Despite the price adjustments at the pump, the cost of transportation and food remains largely unchanged. Gillis-Harry attributed this to the weak purchasing power of Nigerians, which limits the immediate impact of lower fuel prices on broader economic indices.

“If you watch, the cost of transportation has not reduced despite the reduction in fuel prices at the retail market. That tells you that the purchasing power of Nigerians is very weak,” he explained.

He further emphasized the need for increased productivity in sectors like agriculture, fishing, and technology to improve purchasing power. “Go to the park, you will see that transportation costs have not been impacted by the fuel reduction,” he added.

READ ALSO:PETROAN calls on NNPCL to cut petrol prices amid Dangote Refinery’s price reduction

However, Ukadike took a more optimistic stance, arguing that the effects of the petrol price reduction would eventually reflect in transportation and the cost of goods and services over time. “The impact will be gradual; it will eventually impact transportation and others,” he noted.

Concerns Over Frequent Price Adjustments

While price reductions may seem beneficial to consumers, Gillis-Harry expressed concerns over the constant fluctuation of petrol prices, warning that it could disrupt market stability and fuel security.

“Incessant price adjustments will affect petrol security. Arbitrary price hikes and reductions cause serious losses to marketers who might lift fuel stock before the arrival of new stock,” he stated.

He further explained that marketers face challenges in adjusting to sudden price shifts, as they may have purchased fuel at a higher rate and would be unable to sell below their cost price. “There was a lot of fuel that was purchased at the old price that is still in the system, and they have not been sold. Marketers cannot sell below the cost price. It is completely impossible for someone to buy a product at N970 per litre and sell below the purchase price.”

Dangote’s Impact on Fuel Pricing

This latest round of price reductions follows a similar move by Dangote Refinery last December when it slashed its petrol ex-depot price from N899.50 per litre to N970.

The growing rivalry between Dangote and NNPCL has pushed fuel prices down significantly in recent months, bringing relief to consumers but creating uncertainty for marketers.

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As the battle for dominance in Nigeria’s downstream sector continues, industry players and consumers alike are watching closely to see how NNPCL will respond in the coming days.