Price War Escalates: Depot Owners Struggle as Dangote Refinery Resumes Bulk Sales at ₦877/Litre

The Dangote Petroleum Refinery has recommenced its full-scale operations and simultaneously hiked the gantry (ex-depot) price of Premium Motor Spirit (PMS, or petrol) by about 7 percent, raising it from ₦820 to ₦877 per litre. Recent investigations suggest that oil marketers purchasing two million litres or more will still enjoy some relief due to favorable pricing.

This new gantry rate undercuts many depot owners, who currently charge between ₦890 and ₦900 per litre. For instance, Pinnacle and Rainoil are pricing their supplies at ₦890 and ₦885 respectively; Optima and Matrix are holding steady at ₦880 and ₦890 per litre.

Many filling stations are already pushing pump prices beyond ₦900, reflecting the widening gap between gantry and retail pricing. The Oil & Gas Service Providers Association of Nigeria (OGSPAN) President, Mazi Obasi, praised Dangote Refinery’s resilience in overcoming operational challenges and emphasized the refinery’s role in steering Nigeria toward energy independence.

Impact on Depot Owners and Marketers

1. Squeezed Margins
   Depot owners are caught in a bind. With Dangote selling at ₦877, those charging ₦890–₦900 per litre must reevaluate to stay competitive or risk being undersold.
2. Pressure to Lower Prices
   Many expect depot owners to reduce their rates in the coming days. The theory is that Dangote’s scale and capacity will force downstream players to follow.
3. Supply Chain Dynamics
   Marketers purchasing in bulk can still achieve cost efficiencies, but smaller players may struggle to compete.
4. Consumer Impact
   The higher gantry price may gradually feed into pump pricing unless depot owners absorb the costs. Some stations have already exceeded ₦900 per litre in pricing.

Why Dangote Can Dictate Terms

• Scale: Dangote has an installed refining capacity of 650,000 barrels per day—the largest single-train refinery in the world.
• Control of Supply Flow: Because it can load directly via its own gantry, Dangote exerts substantial influence over upstream and downstream pricing.
• Import Dependence: While Dangote aims to source more local crude, a significant portion of its feedstock is still imported, which introduces foreign-exchange and landing cost pressures.

Challenges Ahead & Outlook

• Sustainability of Pricing
  Whether Dangote can maintain the ₦877 rate over several weeks depends on stability in crude supply and foreign-exchange conditions.
• Downstream Consolidation
  Some smaller depot owners and marketers might exit the market or merge to survive the tightening margins.
• Regulatory Scrutiny
  Authorities may step in if they perceive Dangote’s pricing as monopolistic behavior stifling competition.
• Potential Pass-through
  If depot operators can’t absorb further cost increases, pump prices may rise again.