Lagos, January 9, 2026 – The exclusive fuel supply agreement between Dangote Petroleum Refinery and 20 major petroleum marketers, designed to ensure the offtake of approximately 600 million litres of petrol monthly, has broken down due to disagreements over pricing adjustments, industry sources have confirmed.
The collapse of the short-lived deal, which was initiated in October 2025 as a pilot programme, directly contributed to a sharp increase in petrol imports in November 2025. Data from the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) revealed that imports surged to 1.563 billion litres during the month, reflecting heightened reliance on foreign supplies amid the domestic pricing standoff.
The NMDPRA's November 2025 Fact Sheet, titled "State of the Midstream and Downstream Sector," highlighted the spike in imported volumes coinciding with the intensification of the dispute. This marked a significant rebound from lower import levels in prior months, as marketers opted for cheaper international options.
The agreement, announced following a strategic meeting involving key downstream players, aimed to stabilise domestic supply and mitigate recent pump price hikes. Under the arrangement, the 20 selected depot owners – including representatives from A.Y.M. Shafa, A.A. Rano, NNPCL Retail, Salbas, and others – were to collectively lift around 600 million litres monthly, with each committing to a minimum of about 30 million litres.
Chinedu Ukadike, National Public Relations Officer of the Independent Petroleum Marketers Association of Nigeria (IPMAN), had described the framework positively at the time. "At the meeting, Dangote announced plans to sell to only 20 selected marketers who will serve as primary distributors to other dealers. Each of them will lift a minimum of two million litres, which will translate to about 600 million litres every month," Ukadike stated. He expressed optimism that the structure would improve availability and ease retail prices by reducing middlemen distortions.
The deal included provisions for monthly price reviews tied to international benchmarks. Initially, products were supplied at N806 per litre for coastal delivery and N828 per litre ex-gantry. As part of the exclusivity, Dangote temporarily halted direct sales to smaller independent marketers limited to 250,000 litres or less, forcing them to source from the approved 20.
The system operated smoothly at first, with loading via ships and gantries, and additional parties gradually joining the list. However, tensions arose in November when global petrol prices declined, pushing the landing cost of imported premium motor spirit (PMS) below Dangote's rates.
Data from the Major Energies Marketers Association of Nigeria (MEMAN) showed the average landing cost dropping progressively: N849.61 per litre on October 13, N847.61 on October 14, N841.54 on October 20, N839.97 on October 21, and further to N829.77 per litre by October 30. In contrast, Dangote's gantry price remained at higher levels, reportedly around N877 per litre as of October 24.
Industry insiders revealed that marketers expected a downward review to around N750 per litre but encountered reluctance from the refinery. This prompted a shift toward imports, resulting in the November surge and numerous vessels arriving at berths.
In response, Dangote eventually reduced its ex-gantry price to N699 per litre – the lowest recorded in 2025 – but the adjustment was deemed too late. Depot owners and marketers who had stocked at the higher October rates of N828 per litre incurred substantial losses upon resale, while smaller operators faced challenges adapting to the abrupt change.
The fallout has broader implications for Nigeria's downstream sector, underscoring ongoing challenges in transitioning to dominant local refining amid volatile global markets. The disagreement highlights tensions between supporting domestic production and ensuring competitive pricing for consumers and distributors.
As the sector navigates these dynamics, stakeholders anticipate potential renegotiations or alternative supply models to restore stability. For now, the collapsed deal has reinforced Nigeria's continued dependence on imports despite the operational capacity of Africa's largest refinery.
