Marketers Back Out of Petrol Supply Deal With Dangote Refinery as Fuel Landing Costs Crash
- Dangote Refinery's fuel supply agreement with 20 marketers collapses over pricing disputes
- Falling global petrol prices prompt a surge in imports, complicating the domestic market
- Dangote reopens sales to all marketers as competition intensifies amidst ongoing price fluctuations
The fuel supply agreement between the Dangote Petroleum Refinery and 20 major petroleum marketers has collapsed barely a month after it was signed, following sharp disagreements over pricing as global petrol costs fell.
The deal, struck in October 2025, was designed as a pilot scheme under which the marketers would collectively offtake about 600 million litres of petrol monthly, roughly 30 million litres per marketer.
Source: UGC
The arrangement was expected to stabilise domestic supply and help cool retail pump prices. Instead, it has unravelled, triggering a fresh wave of petrol imports.
How the Dangote–marketers' deal was structured
Under the agreement, Dangote Refinery selected 20 depot owners as primary distributors.
Independent marketers were largely excluded and limited to lifting no more than 250,000 litres, forcing them to source supplies through the approved marketers.
The refinery initially fixed prices at N806 per litre for coastal delivery and N828 per litre at the gantry.
According to industry sources, the pricing framework was tied to Eurobob, the international benchmark for European gasoline, with a provision for monthly price reviews in line with global crude oil movements.
The Independent Petroleum Marketers Association of Nigeria (IPMAN) confirmed at the time that the refinery’s strategy was to reduce middlemen, streamline distribution, and improve product availability nationwide.
Falling global prices trigger tensions
The arrangement began to crack in November when international petrol prices dropped sharply.
Importers discovered that landing costs for imported premium motor spirit had fallen below Dangote’s selling price, making imports more attractive.
Data from the Major Energies Marketers Association of Nigeria (MEMAN) showed that the average landing cost of imported petrol declined steadily through October, falling to about N829.77 per litre by October 30.
In contrast, Dangote’s gantry price reportedly remained as high as N877 per litre as of October 24.
Depot owners pushed for a downward review of Dangote’s gantry price, arguing that the agreed pricing mechanism required adjustments in line with global benchmarks.
Sources say the refinery was slow to respond, prompting marketers to turn back to imports, a Punch report said.
Import surge and heavy losses
The pricing standoff coincided with a sharp rise in petrol imports. According to the Nigerian Midstream and Downstream Petroleum Regulatory Authority, total petrol imports jumped to 1.563 billion litres in November 2025, a clear spike linked to the breakdown in negotiations.
Marketers who had lifted products in October at higher prices were left exposed.
Those holding unsold stock faced significant losses when Dangote eventually slashed its gantry price to N699 per litre, the lowest in 2025. Smaller marketers also struggled to adjust to the sudden price swings.
Industry sources say the price cut, while welcome, came too late to salvage the agreement.
Public fallout and policy frictions
The dispute also spilt into the public space, fueling a confrontation between Dangote and the former head of the NMDPRA, Farouk Ahmed, over the issuance of import licences to marketers.
The clash intensified scrutiny of downstream regulation and eventually preceded Ahmed’s resignation in December 2025.
By then, the relationship between the refinery and depot owners had effectively broken down.
Return to open-market sales
Confirming the collapse, IPMAN’s National Publicity Secretary, Chinedu Ukadike, said the October agreement was no longer in force, according to a Punch report.
Dangote Refinery has since reopened sales to all marketers, including independents, lifting as little as 250,000 litres.
According to Ukadike, the decision reflects market realities and the need to avoid supply bottlenecks and artificial price distortions.
He also noted that some marketers continued importing fuel despite signing the exclusivity agreement, further undermining trust.
Market prices are still under pressure
Fresh MEMAN data show that the spot price of imported petrol at the Apapa jetty has fallen to around N696 per litre, slightly below Dangote’s current gantry price of N699 per litre.
The 30-day average import parity price stands at N772.65 per litre, reflecting easing crude prices, lower shipping costs, and a firmer naira.
Source: Getty Images
With both imported and locally refined fuel now closely priced, competition in Nigeria’s downstream market is expected to intensify.
For now, Dangote Refinery is selling into an open market, while marketers remain quick to switch between imports and local supply as global prices continue to shift.
Dangote Refinery rolls out 10-day credit
Legit.ng earlier reported that Nigeria’s downstream petroleum market is seeing another major shake-up as the Dangote Petroleum Refinery unveils a new supply arrangement designed to ease pressure on petrol station owners and dealers nationwide.
In a move that could reshape fuel distribution dynamics, the refinery has introduced a 10-day credit facility backed by bank guarantees, alongside free direct delivery of petrol to registered outlets.
According to a statement released by the Dangote Group on Tuesday, December 30, 2025, via its official X handle, the new initiative allows participating petrol dealers to access fuel on credit for up to 10 days.
Source: Legit.ng
