MONOPOLY, MARKET FORCES, AND FUEL PRICES IN NIGERIA: A SHIFT IN THE PETROLEUM SECTOR
The end users—the individuals who reach into their pockets to pay for fuel—are the real contributors to the wealth of petroleum companies. They are the driving force behind the prosperity of these establishments, the true stakeholders in the industry. Without their patronage, there would be no Dangote Refinery or NNPCL.
For the first time, the federal government has actively discouraged monopolistic practices, marking a significant shift in Nigeria’s economic field. Monopolies have long been associated with market inefficiencies, unfair consumer practices, and stifled innovation. When a single entity controls the supply of a good or service, it can artificially inflate prices, restrict competition, and limit alternatives for consumers. This dominance creates barriers to entry for potential competitors, leading to inferior products and a general lack of incentive for improvement.
A striking example of monopolistic control’s impact on everyday life in Nigeria can be observed in the petroleum sector. Last year was the first time in over a decade that Abuja and probably other parts of the country did not experience fuel scarcity during the Christmas period. However, from mid-January to the present, many filling stations in the capital city have remained empty. According to an analysis conducted last year, Nigeria's daily petrol consumption ranged between 45 million and 50 million liters. A new study would likely confirm that this figure has not significantly decreased.
Contrary to public perception, is Dangote Refinery doing Nigerians a favor by reducing petrol prices? Instead, the reduction is a direct result of economic competition and shifting market forces. Several factors have contributed to this decline in fuel prices:
The competition between Dangote Refinery and the Nigerian National Petroleum Company Limited (NNPCL) has led to a significant reduction in fuel prices. This development emphasizes the impact of market dynamics in stimulating competitive pricing, ultimately benefiting consumers and enhancing economic stability.
Nigeria is gradually reducing its reliance on imported fuel, enhancing local supply and stabilizing prices.
The decline in global oil prices has contributed to reduced domestic fuel costs.
The natural forces of supply and demand continue to influence price adjustments.
On February 27, 2025, Dangote Petroleum Refinery announced a reduction in the ex-depot price of Premium Motor Spirit (PMS), popularly known as petrol, from ₦890 to ₦825 per liter. This ₦65 reduction is a major development in Nigeria’s energy market.
Lagos: ₦860 per liter at MRS outlets
South-West: ₦870 per liter
North: ₦880 per liter
South-South and South-East: ₦890 per liter
This announcement has triggered a response from NNPCL, which has also adjusted its ex-depot prices, intensifying competition and encouraging further price reductions.
Despite this development, many Nigerians have yet to experience a corresponding decrease in transport fares. Some major and independent marketers have not fully implemented the price changes, as they are still selling old stock purchased at higher rates. Until the new supply cycle is fully integrated, the effect of the price reduction on transportation costs may remain minimal.
The current price reduction in Nigeria’s fuel market is not an act of generosity but a direct consequence of competition. With Dangote Refinery’s presence, NNPCL is no longer the sole supplier of refined petroleum products, leading to a healthier, more dynamic market. This shift could mark the beginning of an era where monopoly-driven inefficiencies are replaced by competitive pricing and improved consumer benefits.
However, the question remains: Will this newfound competition be sustained in the long run, or will it lead to another form of monopolistic dominance? Only time and further market developments will tell.
Daniel Okonkwo for Profile International Human Rights Advocate.
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