An economist, Paul Alaje, says the ongoing price war between the Dangote Refinery and the Nigerian National Petroleum Company (NNPC) Limited will “erode abnormal profit” enjoyed by capitalists.
“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 said on Channels Television’s Politics Today programme on Tuesday.
He said Nigerians should be happy there is no agreement between NNPCL and Dangote Refinery. “More of the competition should go on,” the economist said, noting that “if any of them fizzle out, be ready to buy (petrol) at over ₦1,000 again.”
On February 26, 2025, the $20bn refinery owned by Africa’s richest man and industrialist Aliko Dangote, slashed ex-depot price of petrol from ₦890 to ₦825 per litre.
Under the new arrangement, customers purchase the premium commodity at ₦860 per litre at selected outlets in Lagos, ₦870 in the South-West, ₦880 in the North, and ₦890 in the South-South and South-East. Dangote has also reduced the price of diesel in recent times.
Almost immediately, the NNPCL reduced its retail price from ₦945 to ₦860 in Lagos, with a similar price reduction reflection at NNPCL outlets in other states of the Federation.
Alaje said the development is good for the pocket of Nigerians. According to him, if the “cartel” agrees, Nigerians are in trouble but the price war is good for the masses.
He said the price slash of petrol is sustainable, and that it should go below ₦700 per litre.
The economist, however, said NNPCL must produce locally to compete effectively with Dangote Refinery, and not rely on imported products.
Nigeria, Africa’s most populous nation, faces energy challenges, with all its state-owned refineries non-operational for decades until 2024. The country was heavily reliant on imported refined petroleum products, with the state-run NNPC being the major importer of the essential commodities.
Fuel queues are commonplace in the country. Prices of petrol more than quadrupled since the removal of subsidy in May 2023 by President Bola Tinubu, from around ₦200/litre to about ₦1000/litre, compounding the woes of the citizens who power their vehicles, and generating sets with petrol, no thanks to decades-long epileptic electricity supply.
Last December, the billionaire industrialist commenced operations at the facility situated in Lagos with 350,000 barrels a day. The refinery, which was initially bogged by regulatory battles, hopes to achieve its full capacity of 650,000 barrels per day by the end of the year. The refinery has begun the supply of diesel and aviation fuel to marketers in the country and now petrol.