Exclusive supply pact collapses after one month as cheaper imports flood Nigeria’s petrol market
The fuel supply agreement between the Dangote Petroleum Refinery and 20 leading petroleum marketers has broken down following sharp disagreements over pricing, industry sources have confirmed.
The failed arrangement, which was expected to stabilise petrol supply nationwide, has been linked to the spike in fuel importation recorded in November 2025, when total imports climbed to 1.563 billion litres.
Data released by the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) in its November 2025 Fact Sheet showed a significant increase in imported petrol volumes during the period when tensions between the refinery and marketers escalated.
The agreement, reached in October 2025 as a pilot scheme, required the 20 selected depot owners to jointly lift about 600 million litres of petrol monthly from the Dangote Refinery. Each marketer was expected to offtake roughly 30 million litres per month under the deal.
At the time, the National Public Relations Officer of the Independent Petroleum Marketers Association of Nigeria (IPMAN), Chinedu Ukadike, confirmed that the refinery had proposed the arrangement after consultations with key downstream players.
According to Ukadike, the initiative was designed to improve product availability, reduce the influence of middlemen, and ease rising pump prices. The meeting that birthed the deal involved major distributors including A.Y.M. Shafa, A.A. Rano, NNPCL Retail, Salbas, among others.
Under the plan, Dangote was to sell petrol exclusively to the 20 marketers, who would then serve as primary distributors to other dealers nationwide.
However, the agreement reportedly began to unravel barely a month later.
Two industry insiders familiar with the negotiations said the dispute centred on Dangote’s refusal to reduce its gantry price in line with declining international petrol benchmarks.
One source explained that the arrangement allowed for monthly price reviews tied to global market movements. Petrol was initially sold at N806 per litre for coastal deliveries and N828 per litre at the gantry.
As part of the deal, Dangote temporarily stopped direct sales to independent marketers who typically purchased smaller volumes of 250,000 litres or less, forcing them to source products through the approved marketers.
“The system worked smoothly at first. Products were loaded through ships and gantries, and additional marketers were gradually added,” the source said.
Problems surfaced in November when international petrol prices dropped below Dangote’s selling price. Importers argued that prices should have fallen to around N750 per litre, but the refinery was slow to adjust.
“This delay opened the door for massive imports in November,” the source added.
By the time Dangote reduced its gantry price to N699 per litre, the lowest recorded in 2025, many marketers had already turned to imported fuel. Depot owners who purchased products earlier at higher prices were left with unsold stock and heavy losses.
Market data from the Major Energies Marketers Association of Nigeria (MEMAN) and petroleumprice.ng showed that the average landing cost of imported petrol fell to N829.77 per litre by late October, below Dangote’s ex-depot price at the time.
Records indicated that Dangote’s gantry price remained as high as N877 per litre as of October 24, 2025, making imports more attractive.
The pricing dispute later spilled into the public space, culminating in a confrontation between Dangote Group and the former Chief Executive of NMDPRA, Farouk Ahmed, over the issuance of import licences to marketers. Ahmed eventually resigned in December 2025.
With the collapse of the agreement, Dangote Refinery has now abandoned the exclusive supply structure.
“There is no longer any alignment between Dangote and the depot owners,” the source said. “The refinery is now selling to any marketer that can offtake products, regardless of volume.”
Confirming the development, petroleumprice.ng Chief Executive Officer, Jeremiah Olatide, said the pricing framework was based on the Eurobob benchmark, with the understanding that prices would be reviewed monthly.
He noted that while Dangote adjusted prices after the benchmark fell, the reduction was insufficient compared to international levels, prompting marketers to return to imports.
“The relationship lasted barely one month. Importation surged in November, and vessels flooded Nigerian ports,” Olatide said.
The National Publicity Secretary of IPMAN, Chinedu Ukadike, also confirmed that the agreement was no longer in effect.
“The arrangement has ended. Dangote has liberalised sales, and marketers can now buy directly, even in smaller volumes,” Ukadike stated.
He added that some marketers had violated the exclusivity clause by importing fuel even after signing the agreement, further weakening the partnership.
“As a business decision, the refinery decided to open the market to all buyers to avoid distortions and artificial price hikes,” he said.
Currently, Dangote Refinery is offering petrol to marketers in quantities as low as 250,000 litres, marking a return to open-market operations.
Efforts to obtain an official reaction from Dangote Group spokesperson, Anthony Chiejina, were unsuccessful as calls and messages went unanswered.
Meanwhile, fresh data from MEMAN show that the spot import price of petrol at the Apapa jetty has fallen to about N696 per litre, slightly below Dangote’s current gantry price of N699 per litre.
The decline has been attributed to easing global crude prices, reduced shipping costs, and a stronger naira, which recently appreciated to about N1,419 to the dollar.
Industry analysts say the narrowing price gap between imported and locally refined petrol could intensify competition in the downstream sector, with direct implications for pump prices, depot margins, and the sustainability of local refining.
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