By Kriz David

One of the most significant developments in the post-subsidy era is the growing standoff between Dangote Petroleum Refinery (DPR) and the Major Oil Marketers Association of Nigeria (MOMAN) / Depot and Petroleum Products Marketers Association of Nigeria (DAPPMA). The ongoing price war between the Dangote Refinery and the Oil Marketers is a ticking time bomb that, if ignored, could ruin Nigeria’s economy.

Undoubtedly, Dangote’s entry into oil marketing has disrupted the erstwhile system. While the media often emphasizes the price per liter, the real conflict is rooted in market dominance, contract negotiations, and control over the supply chain. For decades, NNPC held a monopoly as the sole subsidized supplier. Today, Dangote is the leading private domestic supplier, selling directly from its $20 billion refinery to consumers, competing with other oil marketers that collectively invest over $20 billion in infrastructure, logistics, and retail networks across the country. These oil marketers employ millions of Nigerians and support millions of dependents; the same applies to the Dangote Petroleum Refinery. Oil marketers pay significant income taxes and VAT to the Federal Government and State Governments. The Dangote Petroleum Refinery operates in the free trade zone, which either enjoys a tax holiday or is exempted from most taxes.

What Nigeria is witnessing is a classic post-monopoly market transition. Setting the new commercial rules of engagement would give rise to the current conflict. A high-stakes market-power tussel, understandably. What is unusual is the absence of a clearly articulated policy framework to define fair competition and balance market power in a deregulated market. The government must step in to define the balance of power in the new market order. The policy thrust should be to foster a stable, efficient downstream market that guarantees national supply security, protects existing investments, and delivers affordable products to consumers. Collaboration, not destructive competition, seeking to cancel out the competition, or any stakeholder, must be emphasized.

A practical policy model to consider is for the Federal Government to prioritize local refining of Nigeria’s Domestic Crude Allocation (DCA) by establishing structured refining agreements with Dangote Refinery and other local refineries. In this model, domestic crude would be specifically allocated for local refining. NNPCL pays Dangote Petroleum Refinery and other local refineries the refining costs either in cash or in crude. NNPCL would then sell the refined products derived from the DCA to Nigerians through licensed oil marketers at a netback pricing framework—crude extraction, refining costs, and regulated margins—rather than being pegged directly to volatile international market prices. This model eliminates the need for foreign exchange to import refined products, guarantees reasonable returns for all stakeholders, and significantly moderates pump prices for consumers. It would also preserve existing investments in marketing and distribution while maximising the benefits of domestic refining capacity.

The downstream sector of the petroleum industry is crucial for Nigeria’s economic stability. Government policy on deregulation should be carefully reviewed and modified to prevent unfair disadvantages or loss of investments for any stakeholders. The imposition of an import tax on petroleum products would not avert the looming danger. Instead, a balanced, well-thought-out policy recalibration would drive double-digit economic growth and lift millions of Nigerians out of poverty. The stakes are too high for inaction.

Dr. Kriz David is a Futurist and a Public Policy Expert. You can follow him @drkrizdavid on all social media platforms.