By Ibrahim Aishat Ayomide
Nigerians are currently facing higher energy costs compared to last year, but recent reductions in petrol prices have been linked to increased domestic refining by the Dangote Refinery, a stronger naira, and enhanced supply chain efficiency.
Oil marketers attribute the decline in prices to these factors, which have led to a consistent supply, reduced smuggling pressures, and fostered competitive pricing within the downstream sector, ultimately benefiting consumers in Nigeria.
Since its partial operations began, Dangote Refinery has had a considerable impact on the country’s petroleum market, recording multiple price reductions throughout 2025 and committing to supply over 1.5 billion liters of petrol each month starting in December.
Marketers Associate Price Drops with Refinery Output and Naira Strengthening
In an interview Chinedu Ukadike, Publicity Secretary of the Independent Petroleum Marketers Association of Nigeria (IPMAN), confirmed the ongoing decrease in petrol prices, crediting it to the increased output from the refinery and the appreciation of the naira.
“Yes, prices are declining. This is due to two key factors: increased production from Dangote and the strengthening dollar. As the dollar decreases in value, it positively impacts pricing,” Ukadike stated.
Kingsley Smart, a fuel distribution company manager in Abuja, explained that improvements in supply chains have resolved issues of scarcity and stabilized the market.
“The recent drop in Premium Motor Spirit (PMS) prices is largely due to enhanced supply chain efficiencies. It used to be challenging for independent marketers to access products at this time of the year, but thanks to government assurances of sufficient supply, there’s no panic buying now,” he noted.
He also mentioned that both NNPC and Dangote had lowered their depot prices to reflect broader market conditions, including a slight decrease in international crude prices. “Improved domestic refining capacity is also a factor contributing to the price declines,” he added.
Dangote Refinery Refutes Links to Tariff Changes
Dangote Refinery has consistently adjusted its prices downward throughout the year. Petrol, which was approximately N850 per liter in August 2025, dropped to N820 and further to N828 in November, with coastal prices decreasing from N854 to N806 per liter.
Despite claims suggesting that a government reversal of the 15% import tariff on petrol was behind these price reductions, the refinery firmly denied such assertions. A statement from the company emphasized that its pricing strategy is based on internal factors like production efficiency and competitive positioning in the market.
“The reduction in our petrol price was not a result of any change in import tariffs,” the company clarified, referring to it as a strategic decision aimed at stimulating domestic sourcing of refined products and enhancing market value.
1.5 Billion Liters Commitment to Commence in December
On December 1, Dangote Group announced its commitment to supply 1.5 billion liters of petrol monthly from its Lagos refinery, a move aimed at bolstering local production and reducing Nigeria’s dependence on fuel imports.
This announcement followed the Federal Executive Council’s endorsement in October for the refinery’s expansion to 1.4 million barrels per day (bpd), which is intended to cater to local and regional demand.
Nigerian Petrol Still 55% Lower Than Regional Prices
Despite these advances, Dangote expressed concerns over smuggling, highlighting it as a persistent threat to domestic fuel stability.
During a press briefing after a meeting with President Bola Tinubu in Abuja, Aliko Dangote acknowledged that price variations in neighboring countries continue to fuel smuggling activities.
“Prices are decreasing because we need to remain competitive with imports. Fortunately, smuggling has lessened, but it hasn’t been eradicated,” Dangote remarked. He pointed out that the domestic price of around N800 per liter is significantly lower—about 55% less—than that in neighboring countries, where fuel prices reach as high as N1,500 or N1,600 per liter.
Enhanced Border Enforcement to Combat Smuggling
To address the smuggling issue, the Nigerian government has heightened border security, particularly in northern regions. According to Ukadike, operations like “Operation Whirlwind,” led by the National Security Adviser and Nigeria Customs, are aimed at improving border control.
“They are making concerted efforts to secure borders, including a strong military presence in the northern areas,” Ukadike noted. He added that Dangote Refinery is now legally exporting products to neighboring countries, which could serve as a viable alternative to smuggling.
“By legally supplying products to surrounding African nations, the incentive for smuggling may be diminished,” he said. Moreover, independent marketers are adapting to the market dynamics by extending their operating hours, some even into late nights.
Dangote Refinery, Strengthening Naira Contributing to Declining Petrol Prices — Insights from Oil Marketers
