Dangote-NNPC Price War Will End Abnormal Profits – Economist
Thank you for reading this post, don't forget to subscribe!Economist Paul Alaje has described the ongoing price competition between Dangote Refinery and the Nigerian National Petroleum Company (NNPC) Limited as a significant development that will erode excessive profits traditionally enjoyed by market players while benefiting Nigerian consumers.
Speaking on Politics Today on Channels Television, Alaje noted that while some may see it as a price war, economic principles suggest that competition in a duopoly ultimately favors the populace by driving prices toward neutrality. He emphasized that the absence of a pricing agreement between Dangote Refinery and NNPC is a positive outcome, stating that more competition should be encouraged.
“You may want to call it a price war, but in economics, when a duopoly fights, it is the best for the populace because they will drive themselves to neutral profits,” Alaje explained. “If any of them fizzle out, be ready to buy petrol at over ₦1,000 again.”
Recent Fuel Price Adjustments
On February 26, 2025, Dangote Refinery, owned by billionaire industrialist Aliko Dangote, slashed its ex-depot price of petrol from ₦890 to ₦825 per liter. Under the new pricing structure, petrol was sold at ₦860 per liter at select outlets in Lagos, ₦870 in the South-West, ₦880 in the North, and ₦890 in the South-South and South-East. This follows earlier price reductions on diesel by Dangote Refinery.
Almost immediately, NNPC responded by cutting its retail price from ₦945 to ₦860 per liter in Lagos, with corresponding reductions at its outlets nationwide.
Alaje argued that this price competition is beneficial for Nigerians, as it prevents a monopoly or cartel from dictating fuel prices. “If the cartel agrees, Nigerians are in trouble, but this price war is good for the masses,” he said.
Future Price Projections and Challenges
According to Alaje, the recent fuel price cuts are sustainable, and he expects petrol prices to fall further, potentially dropping below ₦700 per liter. However, he stressed that for NNPC to compete effectively with Dangote Refinery, it must prioritize local refining rather than relying on imported petroleum products.
Nigeria, Africa’s most populous country, has long struggled with fuel scarcity, price volatility, and energy crises. State-owned refineries have remained non-operational for decades, forcing heavy reliance on imported refined petroleum products, with NNPC being the primary importer. The removal of fuel subsidies in May 2023 led to a dramatic price surge, with petrol prices rising from around ₦200 per liter to nearly ₦1,000, significantly straining household budgets.
With Dangote Refinery ramping up production, industry observers expect a major shift in Nigeria’s petroleum pricing dynamics. The $20 billion refinery, located in Lagos, began operations in December 2024 with an initial capacity of 350,000 barrels per day. The facility aims to reach its full production capacity of 650,000 barrels per day by the end of 2025, further increasing domestic fuel supply and potentially stabilizing prices.
As the competition between Dangote Refinery and NNPC unfolds, experts believe that increased local refining and market-driven pricing mechanisms will help alleviate Nigeria’s long-standing fuel challenges.
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