Fuel price war triggers business closures as independent marketers left without cushioning mechanism
By Jeph Ajobaju, Chief Copy Editor
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“PETROAN has over 7,000 retail outlets, and over 70 per cent of those outlets are closed and are out of business today. And the reason is that we struggle to take loans from the bank.
“You buy products from a supplier and then before you can get to your filling station, prices have either increased or dropped for no justifiable reason.
“And then they have a few filling stations that would be selling at lower prices, and of course, all traffic goes there, even if motorists have to stay in the queue for hours. So what happens, people are thrown out of business. So what choice do we have?” – PETROAN President Billy Gillis-Harry.
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Independent fuel marketers are scaling down operations in the relentless pump price war, with more than 4,900 filling stations already closed, oil dealers have disclosed.
Players cited rising financial losses from unpredictable cost of petrol sold by Dangote Refinery and importers.
Dangote Refinery, a $20 billion facility, has changed its ex-depot price about six times between January and April this year alone, with an initial N950 per litre, followed by gradual reductions to N835.
The PUNCH reports that marketers are lamenting that the situation has compelled them to scale down on volume of purchase, with some having to pool resources to afford a single truckload of fuel.
Marketers without the required financial war chest have been forced to close their businesses.
The Bola Tinubu administration, after removing fuel subsidy in 2023, fully deregulated oil industry downstream segment in October 2024, effectively placing pricing at the mercy of market forces.
This has triggered a fierce battle for market share between Dangote Refinery with production capacity for 650,000 barrel per day (bpd) and fuel importers as both sides strive to assert dominance in a newly liberalised market.
Industry players say the crisis is driven by unregulated pricing, logistics bottlenecks, and the absence of clear market signals from dominant refiners, forcing independent marketers and retailers to close shop or adopt cost-sharing survival strategies.
They want urgent robust economic buffers and more effective regulatory oversight to stabilise the market and protect their businesses from further shocks.
The Petroleum Products Retail Outlets Owners Association of Nigeria (PROOAN) said over 70 per cent of its 7,000 retail outlets have closed due to unsustainable operating conditions.
“PETROAN has over 7,000 retail outlets, and over 70 per cent of those outlets are closed and are out of business today. And the reason is that we struggle to take loans from the bank,” PETROAN President Billy Gillis-Harry told The PUNCH.
“You buy products from a supplier and then before you can get to your filling station, prices have either increased or dropped for no justifiable reason.
“And then they have a few filling stations that would be selling at lower prices, and of course, all traffic goes there, even if motorists have to stay in the queue for hours. So what happens, people are thrown out of business. So what choice do we have?
“That situation has forced us to source products from those who can give us a soft landing, and then we can be able to recover and compete, because if someone knows that there are products and he is going to buy and do his business, there is no need to stay on a queue for fuel.
“So this is why we came out to cry about this price fluctuation, we can’t tell what the reason is from our refining giant.
“It is difficult to understand, and we called on the authorities to wade into it quickly because we had foreseen a situation where there may not be any liquidity to stock or restock products. And that would bring scarcity and a hike in price.”
More than 70 tank farm operators have also ceased operations in the past two years, leaving their facilities abandoned as retailers and station owners avoid utilising their services.
The dormant tank farms, 65 per cent of the total 120 approved, now stand idle, as operators bypass them for alternative trucking options.
The business closure was primarily driven by the removal of the fuel subsidy which led to a significant increase in petrol prices and affected the purchasing power of marketers.
The Independent Petroleum Marketers Association of Nigeria (IPMAN) confirmed that its members are grappling with heavy losses due to fluctuating prices and worsening logistics.
IPMAN National Publicity Secretary Chinedu Ukadike said the members have recorded poor performance across key indicators, citing persistent pump price reductions.
He attributed much of the setback to price instability, severe logistics, and transportation challenges, as many trucks spend up to three days in transit before reaching their destinations.
Ukadile disclosed that a recent IPMAN survey shows that its members lose between N300,000 and N1 million per truck, depending on the quantity of product loaded.
His words: “The uncertainty and disparity in price are always present in any liberalised market. Once the price is not being regulated, you would experience inherent fluctuations, and this makes buyers careful of how many litres they would be buying because of speculations and a price drop.
“All of these things modulate buyers’ and marketers’ behaviour. I also know that in the last few days under review, it has not been easy for independent marketers.
“We have experienced downward reviews in our key performance indicators, and because of our logistics and transportation problems, most of our trucks spend three days on the road before they get to our destinations, and when they get there, prices have dropped resulting in losses ranging from N300,000 to over N1 million depending on the quantity.
“You now find out that marketers sell at a loss, and this has remained the only reason why we don’t change prices immediately when they happen. The effect of that decrease is on the marketers to bear. We don’t have buffers or an economic wedge to regain the loss.
“We have been getting losses and losses within the period under review. But we are businessmen, and we are still on the ground. We would continue to push and see how we can maintain our filling stations and ensure service delivery to the nation.
“We have over 20,000 registered IPMAN marketers. Marketers are no longer taking products in bulk; most of us now combine to buy products. You can have three marketers bring together funds to buy products.
“So instead of losing out and shutting down, marketers prefer to just combine money to buy a truck, and that is the way we are operating now. It is skeletal because of the deficit in our financial value.”
The crisis underscores the wider implications of Nigeria’s liberalised fuel market. With prices left to market forces and no cushioning mechanism in place, independent players, who form the backbone of distribution, are finding it increasingly difficult to survive.
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