The Dangote Petroleum Refinery is set to stop supplying Premium Motor Spirit (PMS), commonly known as petrol, to major oil marketers that continue to hold licences to import the product, according to industry sources.
The reported decision comes amid growing competition between locally refined petrol and imported products in Nigeria’s downstream petroleum market.
The refinery is understood to be concerned that continued petrol imports are limiting the market available to domestic refiners at a time when the country is seeking to reduce its dependence on imported petroleum products.
Dangote raises concerns over petrol imports
Figures cited by the Dangote refinery indicate that imported PMS accounted for about 43 per cent of Nigeria’s total petrol supply in July.
The refinery believes the continued arrival of imported petrol could make it more difficult for locally refined products to gain a larger share of the domestic market.
The development comes after years of calls for Nigeria to strengthen domestic refining capacity and reduce its exposure to international fuel supply disruptions.
With the Dangote refinery now producing petrol on a commercial scale, the company has increasingly argued that Nigeria should prioritise locally refined products where they can meet national demand.
Six companies hold petrol import licences
The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) issued petrol import licences to six companies in May as part of efforts to maintain adequate fuel supply and promote competition in the downstream sector.
The companies are:
Matrix Energy
A.A. Rano
AYM Shafa
NIPCO
Pinnacle Oil and Gas
Bono Energy
The licences reportedly cover a combined allocation of about 720,000 metric tonnes of PMS, with individual allocations ranging from 60,000 to 150,000 tonnes.
The approval of the import licences reflects the government’s position that imported petrol can play a role in maintaining supply security, particularly when market conditions require additional volumes.
However, Dangote’s reported decision introduces a new dimension to the relationship between local refiners and marketers operating under the approved import regime.
Refinery to prioritise non-importing marketers
Industry sources said Dangote Refinery intends to prioritise marketers that do not hold petrol import licences.
Under the reported arrangement, companies that continue importing PMS may have to depend more heavily on overseas supplies, while marketers that purchase locally refined products could receive greater attention from the refinery.
If implemented, the policy could significantly affect the way major petroleum marketers source products and manage their storage and distribution networks.
It could also lead to increased competition between imported and locally refined petrol, particularly in areas where marketers have access to both supply channels.
Quality concerns also emerge
Another issue reportedly raised by the refinery relates to the quality of imported petrol.
Sources said Dangote is concerned that imported petrol of uncertain quality could potentially be blended with locally refined PMS before being distributed to filling stations.
Such a situation could make it difficult for consumers and regulators to identify the origin of a particular product if quality concerns emerge.
The refinery has also questioned whether the available laboratory infrastructure is sufficient to conduct comprehensive testing of all imported petrol cargoes entering the country.
Quality control remains an important issue in Nigeria’s petroleum industry because differences in fuel specifications can affect vehicle performance, engines and other equipment.
What the decision could mean for petrol supply
The reported move could result in a more divided petrol supply system in Nigeria.
Dangote Refinery could increasingly focus its domestic sales on marketers that do not import petrol, while licensed importers could continue sourcing products internationally.
Such a development could affect the availability of petrol at different depots and distribution points across the country.
It could also influence transportation costs, depot prices and the final price paid by consumers, depending on the cost of imported cargoes, local refinery output and logistics.
However, the actual impact on pump prices will depend on several factors, including international crude oil prices, exchange rates, shipping costs, local refining volumes, transportation expenses and competition among petroleum marketers.
Dangote’s long-running position on imports
The latest development is part of a broader debate that has followed the expansion of domestic refining capacity in Nigeria.
Dangote Refinery has previously raised concerns about continued dependence on imported petroleum products, arguing that excessive imports could weaken the business case for investment in domestic refining.
The company has also indicated that prolonged accumulation of unsold petrol could create significant storage and financial costs.
In such circumstances, the refinery could choose to export excess refined products rather than maintain large inventories in the domestic market.
The position reflects a wider economic argument: Nigeria has invested heavily in developing domestic refining capacity, and greater utilisation of local refineries could potentially reduce the country’s dependence on imported petroleum products and strengthen domestic value chains.
Government faces balancing act
The Federal Government and petroleum regulators, meanwhile, have to balance two important objectives — encouraging domestic refining while ensuring that consumers have reliable access to petrol at competitive prices.
The import licences granted to the six companies were intended to support supply security and competition within the downstream petroleum market.
At the same time, locally refined petrol provides an opportunity for Nigeria to retain more value from its crude oil resources and reduce exposure to international supply disruptions.
The challenge for regulators will therefore be ensuring that competition between local refiners and importers does not result in supply shortages, unfair market practices or unnecessary increases in petrol prices.
What happens next?
The situation is likely to attract close attention from petroleum marketers, regulators and consumers as the industry adjusts to increased domestic refining capacity.
If Dangote Refinery proceeds with the reported policy, affected marketers may have to reassess their supply strategies and determine whether to continue importing petrol or rely more heavily on locally refined products.
For consumers, the most important issue will remain availability and affordability.
The coming months could therefore provide a clearer picture of whether increased domestic refining will translate into a larger share of locally produced petrol in Nigeria’s market, or whether imported products will continue to play a significant role in meeting national demand.