Nigerian consumers are experiencing significant relief at the pump as the price of Premium Motor Spirit (PMS), commonly known as petrol, continues its downward trajectory. The price drop is attributed to a powerful combination of increased domestic refining output from the Dangote Refinery, a strengthening Naira, and improved supply chain efficiency in the downstream sector.
Oil marketers confirm these factors are working in tandem to ensure a steady supply, curb smuggling, and introduce competitive pricing dynamics that were absent when the country relied solely on imports.
1. The Dangote Refinery Effect: Domestic Supply Surge
The 650,000 barrels-per-day Dangote Petroleum Refinery has fundamentally altered Nigeria’s petroleum product market since commencing partial operations, driving multiple price cuts throughout 2025.
-
Price Reduction: The refinery has consistently lowered its prices for marketers. In November 2025, the refinery’s coastal price was cut from ₦854 to ₦806 per litre, prompting major depot operators to adjust their gantry prices downward to an average of ₦840 per litre as of early December.
-
Supply Pledge: The company has made a landmark commitment to national fuel security, pledging to supply over 1.5 billion litres of petrol monthly (equivalent to 50 million litres daily) beginning in December 2025. This move is specifically designed to guarantee an uninterrupted supply through the festive season and beyond, with a plan to increase monthly supply to 1.7 billion litres from February 2026.
-
Competitive Pressure: The presence of a massive local supplier like Dangote has introduced competition that forces imported products, which often struggle with higher logistics and foreign exchange costs, to lower their prices to compete.
Alhaji Aliko Dangote stated that the elimination of fuel queues in Nigeria, a historic problem, is now happening “not through imports but by producing locally.”
2. Macroeconomic Boost: The Strengthening Naira
Oil marketers, including the Independent Petroleum Marketers Association of Nigeria (IPMAN), have explicitly credited the recent gains of the Naira against the US Dollar as a key factor in price moderation.
-
Reduced Import Cost: Since refined products are traded internationally, the cost is dollar-denominated. As the Naira gains value, the cost of converting Naira to dollars for importation or even for purchasing locally-refined crude feedstock (which is priced at international rates) decreases, leading to lower final pump prices.
-
Market Sentiment: The improved stability and strengthening of the Naira—with Nigeria’s external reserves surpassing $45 billion for the first time in six years—have fostered market confidence, which helps subdue speculative pricing.
3. Supply Chain Efficiency and Smuggling Deterrence
Market efficiency has also contributed to the stable price trend:
-
Improved Logistics: According to marketers, the assurance of steady domestic supply from the Dangote Refinery has eased pressure on logistical bottlenecks typically associated with end-of-year product loading and distribution.
-
Subdued Smuggling: Despite Nigeria’s domestic petrol price still being significantly cheaper (about 55%) than in neighboring countries, Dangote noted that the price moderation and consistent supply have “reduced [smuggling] significantly, though not completely.” The continuous availability of competitively priced local products makes high-volume cross-border smuggling less profitable and riskier.
The combined effect of a strengthened domestic refining capacity and improved currency stability is signaling a new era for Nigeria’s downstream petroleum sector, shifting the dynamics from total import dependence to energy self-sufficiency.
