Marketers may dump NNPCL as price war with Dangote rages

Due to fierce competition in the downstream oil sector's refined product prices, some oil marketers are starting to replace the Nigerian National Petroleum Company Limited's branding on their filling stations as dealers abandon their franchise agreements with NNPCL.

Many others, especially those in Lagos, are reportedly thinking about making the shift in light of the recent collapse in refined product prices caused by the $20 billion Dangote Petroleum Refinery in Lekki.

The name of the national oil company has already been abandoned by a few dealers who previously had the NNPCL emblem on their filling stations near Wawa on the Lagos-Ibadan motorway and at Ibafo, which is still along the main road.

Independent marketers aim to accomplish adequate product off-take at a cheaper rate, as the deregulation of the downstream oil sector has led to intense competition.

Many filling stations formerly affiliated with the national oil company are now being renamed and rebranded under the ownership of private oil marketers, particularly in Lagos and surrounding states.

It was also learned that more marketers may relinquish their licences with NNPCL due to the reduced loading costs of Premium Motor Spirit (petrol) refined by the Dangote refinery, which is currently lower than the landing cost of imported petrol.

A petrol price war was reignited in the sector recently after the Dangote Petroleum Refinery slashed its loading costs to N890 from N950 per litre.
Dealers clarified that the renaming of filling stations is a marketing strategy used to acquire cheaper goods at a lower cost from the Dangote refinery and other import suppliers.

In an exclusive interview on Tuesday, Chinedu Ukadike, the National Publicity Secretary of the Independent Petroleum Marketers Association of Nigeria, affirmed this claim.

In the oil industry, a franchise licence is a legal authorisation given to a person or business to run a business or distribute goods under a well-known brand or system.

This usually entails a contract that, in return for fees or a portion of sales, permits the franchisee to use the franchisor's resources, operational model, and brand.

According to Ukadike, marketers have embraced this new approach because the NNPCL is no longer the exclusive importer and distributor of refined petroleum products.

He said, “Yes, that observation is correct. Some marketers are changing and rebranding. Remember that there was a time NNPCL was the sole distributor and importer of petrol. So, marketers then gave their filling stations as franchises so that they could get products.

“So marketers normally give their companies to NNPCL to be able to have petroleum products. But now that the game has changed, you can even see some marketers now changing to MRS filling stations. Because MRS is now selling cheaper than any other station.

“People want where they want to get turnover and return on investment. If you are carrying Total on as a brand name and Total is not giving you petrol products, what is the sense of carrying the name? You have to remove it and get a better alternative. Most of those filling stations (that are changing name), NNPC don’t own them. NNPC only collected them on the franchise.”

Attempts to contact the NNPCL spokesperson, Femi Soneye, for an explanation of why marketers are switching from the company’s brand, proved unsuccessful, as he did not reply to messages sent to his phone.
Olatide Jeremiah, an oil and gas specialist who verified the agreement, claimed that marketers utilised the franchise licence as a way to obtain less expensive goods from NNPCL, which at the time was still importing.

He acknowledged that the establishment of the Dangote refinery and the national oil company's failure to reach a deal to fix petrol pricing with the Lekki-based facility had blocked the path that brought in additional money.

"Yes, it is true," said Jeremiah, the CEO of petroleumprice.ng. All of this took place prior to the Dangote refinery's establishment but after the subsidy was eliminated.

He went on to say, "NNPCL was ordered to control the price after the removal and the price of petrol increased, and they shouldn't be permitted to keep skyrocketing. So NNPCL and the majors were pegging the price at N500 but the landing cost was above the amount. This affected importers and independent marketers who imported fuel. For instance, Petrocam imported and claimed that its landing cost was N700 but the majors and NNPCL were selling at N500 per litre. That is a difference of N200 and was a huge loss.

“So actually NNPCL was subsidising internally and when independent marketers noticed this and were losing sales, they began applying for NNPCL franchise lincence. The marketers paid millions to get the franchise licence because they were loading from NNPCL depot at a cheaper rate.

“NNPCL was the one dictating price for all the majors at that time because of public outcry and they used to buy, till Dangote came in. They also wanted to do the same thing with Dangote to fix the price but the arrangement didn’t work because Dangote wanted to sell to everyone. Its price was better and independent marketers could buy directly.

“The franchise licence was also an avenue to make more profit because some marketers got licence for one of their stations but would transport products to other stations and sell at a higher price to Nigerians. The slot of getting fuel tankers at that time was twice in a month.”

The Chairman of PETROAN in Lagos State, Akinola Ogunyolemi, said most of the outlets are not originally owned by the NNPC.

He said the removal of the NNPCL symbol might mean the end of an agreement or a breach of it by either party.
These are personal outlets. They will remove the NNPCL logo if a NNPCL contract expires and they are not prepared to proceed with it or if they receive a compelling offer. They will use other people's names and rebrand once more. That might be the cause.

The majority of the stores are not owned by NNPCL. With your contract with them, you can have your filling station constructed and place NNPCL there. You may choose to go ahead and turn over the station to Mobil or Total if they are unable to fulfil your agreement with them (because they occasionally violate contracts as well). "You own it," Ogunyolemi declared.

Additionally, experts pointed out that additional licenses can potentially be cancelled due to the price of imported petrol now costs more than products obtained from the Dangote refinery.

According to the latest data released by the Major Energies Marketers Association, the on-spot cost of landing PMS has reached N910.14 per litre at the ASPM and N910.52 at the NPSC depot.

The document also stated the 30-day average cost of petrol surged to N939.03 per litre.

Meanwhile, fresh details emerged regarding the behind-the-scenes developments that contributed to the reduction in the ex-gantry loading cost of Premium Motor Spirit, commonly known as petrol, sourced from the Dangote Petroleum Refinery and a possible reduced retail cost for Nigerians.

The refinery in a statement signed by Group Chief Branding and Communications Officer, Anthony Chiejina, said the strategic adjustment is a direct response to the positive outlook within the global energy and gas markets, as well as the recent reduction in international crude oil prices.

“Dangote Petroleum Refinery has reduced the ex-depot (gantry) price of Premium Motor Spirit, commonly known as petrol, from N950 to N890, effective from Saturday, 1st February 2025.

“This strategic adjustment is a direct response to the positive outlook within the global energy and gas markets, as well as the recent reduction in international crude oil prices,” the statement read.
As stated in the refinery's announcement on January 19, when a slight rise was enacted as a result of the previously rising international crude oil prices, it was pointed out that the price revision reflects the continuous volatility in the world's crude oil markets.

Tuesday's price of Brent crude, the global standard, was $76.76 per barrel, down $4 from early January's price of $81 per barrel.

Although this claim is entirely true, downstream marketers told our correspondent that the decision to lower its petrol prices was influenced by a pricing war between Dangote, the NNPCL, and other marketers.

About a week ago, the NNPCL and a few significant marketers found a different source to import refined products at a lower landing cost than Dangote's price, which sparked the start of this new pricing war.

Despite domestic production, the national oil corporation and other downstream oil marketers imported over 633 million litres of Premium Motor Spirit (petrol) and Automotive Gas Oil (diesel) in January 2025, according to data released last Friday.

"Private depot and Dangote prices were at the same level for a few weeks, unlike before when there was a N20 difference," a merchant stated. We discovered that some people are going after Dangote because they are sourcing cheaper goods from outside the nation. Those depots didn’t want to get out of business and that was why they had to do it to be more competitive.”

Senior executives at Dangote had a meeting in response to the concerns raised by bulk buyers who were losing N31.02 per litre, or a total of N310,159,109.59, according to a second source who verified the development.