As Nigeria’s midstream and downstream oil sectors evolve, stakeholders are divided over competition concerns, warning that the dominance of Dangote’s refinery could stifle fair play. Others argue that government inaction, not monopoly, is the real threat to competition, DARE OLAWIN writes
As the country’s midstream and downstream petroleum sectors evolve, there lies the debate about monopoly or what some stakeholders have termed low competition, warning that the country deserves more than one major player. With the 650,000-capacity Dangote refinery ‘blazing’ as the only petrol-producing refinery in the country at the moment, many have said the facility could assume the position of a price dictator, making fair competition somewhat impossible. However, refiners and manufacturers hold the view that Dangote would not become a monopoly if the government enacts the right measures. Analysts also argued that the failure of other players, especially the Nigerian National Petroleum Company Limited, to compete effectively should not be blamed on any one player.
It was noted that despite the presence of several licensed modular refineries across the country, many remain underutilised or idle due to lack of crude supply, limited access to financing, and regulatory bottlenecks, with stakeholders warning that unless these issues are urgently addressed, the notion of healthy competition in the downstream sector will remain elusive.
This is against the backdrop of the government-owned refineries’ ‘comatose’ status despite the billions of dollars spent on turnaround maintenance. All these have given the $20bn private refinery an edge over others in the country, fuelling fears of a monopoly among some players. Hitherto, the NNPC used to be the price dictator in the downstream as the only importer of refined petroleum products until the Dangote refinery began operations last year and started calling the shots.
The recent plan by the private refinery to start free fuel distribution came as a shock to many, creating tension among some players that Dangote was planning to take over the nation’s energy security. Members of the Petroleum Products Retail Outlet Owners Association of Nigeria also stated that there would be job losses and some filling stations could be shut down.
However, the Crude Oil Refineries Association of Nigeria believed the failure of the government to supply crude oil to modular refineries was the reason many see the Dangote refinery as a monopoly in the downstream sector.
According to CORAN’s Publicity Secretary, Eche Idoko, government inaction, and not Dangote, is the real monopoly threat in the sector. Idoko told The PUNCH that after decades of relying on “broken state refineries” and expensive fuel imports, private refineries have been transforming the country’s energy landscape.
Far from claiming that the Dangote refinery would become a monopoly, he noted that Nigeria already has multiple operational refineries to prove that competition exists. Idoko listed some of the refineries, including the 11,000-barrel-per-day Aradel Refinery in Rivers; the 5,000 bpd Waltersmith Refinery in Imo; the 10,000 bpd OPAC Refinery in Delta; the 20,000 bpd Clairgold Refinery under development in Delta; and the 12,000 bpd Azikel Refinery in Bayelsa, which is nearing completion. This diversity, he said, promotes regional fuel supply, flexible production, and fair pricing.
Govt accused of fuelling monopoly
Idoko stressed that the Dangote refinery’s size was never a guarantee of monopoly, but some government failures promote monopoly. According to him, the government has yet to create a system to guarantee crude oil for all refiners even though the Petroleum Industry Act provided for that. While the Dangote refinery can secure oil through private deals, Idoko worries that smaller players struggle to get feedstock, calling on the government to enforce the Domestic Crude Supply Obligation for fair access.
Funding
The CORAN spokesperson also expressed concerns that there is no dedicated fund for critical refinery equipment such as catalytic reformers essential for producing petrol and the desulfurisation units needed for clean fuels, urging that a Midstream Refinery Development Fund be created by the government, stating that monopoly is not inevitable, and noting that Waltersmith, OPAC, and Aradel are already selling products and the “global markets show that big and small players coexist.”
In his recommendation, the refiner posited that the government must act immediately by guaranteeing crude access via the DCSO policy. He urged the government to launch the MRDEF to fund PMS-producing units, expand the Nigerian Content Development and Monitoring Board’s style of financing for modular refineries, and pass pro-competition laws for fair pricing and infrastructure sharing.
“Dangote is one player among many, including Aradel, Waltersmith, Clairgold, and other CORAN members. The monopoly threat arises only if the government withholds crude oil from smaller refiners and denies them funding for critical equipment. History shows that intervention works in the gas and agriculture sectors. The government should replicate this for refining, and Nigeria should gain true energy freedom. If this fails, the government’s inaction will create the very monopoly it fears.
“The choice is clear. The government needs to act now for competition or enable monopoly through neglect,” he emphasised.
Idoko’s comments appear to have been corroborated by a report by the Nigerian Upstream Petroleum Regulatory Commission, which showed that 82 per cent of the crude oil produced in the first quarter of 2025 was exported, while only 18 per cent was left for local refineries, a seeming testament that local refineries do not have what it takes to operate effectively.
Low competition
Meanwhile, a senior economist at the World Bank, Samer Matta, also raised concerns over what he called low competition in Nigeria’s oil refining sector, warning that protectionist policies and the dominance of a few large players could undermine efficiency, investment, and consumer welfare.
At a webinar organised by major marketers recently, Matta highlighted what he called structural and policy-related barriers preventing a competitive environment in Nigeria’s refining industry, despite ongoing reforms under the Petroleum Industry Act.
According to him, the refining sector in Nigeria remains heavily concentrated and shielded from competition. On his part, the government should not ban fuel importation despite the availability of local refineries. He stated that allowing only domestic refineries to supply the market while restricting imports stifles efficiency and risks creating monopolistic behaviour. According to the World Bank official, Nigeria’s refined product supply between January and April 2025 averaged about 440,000 barrels per day, an output he said can be served by just two world-scale refineries.
He mentioned that the lack of competition could affect the refinery itself, saying, “With the absence of healthy and vigorous competition, a refinery facing no other serious competitors could find it difficult to become and remain efficient.”
Matta criticised Section 317(9) of the PIA, which grants domestic refineries first rights to supply the local market before imports are allowed.
“Refineries should be exposed to vigorous competition. Allowing only refineries to import products would eliminate competition from imports. The policy of allowing domestic refineries to supply the domestic market first and allowing imports only when there is a shortfall also goes against competition policy. In this regard, 317 (9) in the PIA is misguided. With the absence of fair and vigorous competition, even if a firm were to achieve efficiency improvement, it does not have to pass on efficiency gains in the form of lower prices to consumers. Markets without adequate competition usually have higher prices than those with adequate competition,” he maintained.
The economist noted that this approach was similar to that of South Africa, where some policies led to regional monopolies and inefficiencies, even among large refineries. Matta also contrasted this with Belgium, where multiple efficient refineries thrive despite the country having no crude oil production, attributing this to a highly open and competitive market.
He warned that protectionist policies not only hinder competition but may also lead to higher prices for consumers, as efficiency gains are not passed down in monopolistic environments.
He urged Nigerian authorities to adopt a more open and transparent regulatory approach, warning that excessive government intervention, like prioritising domestic firms for imports or controlling who can access the market, creates distortions that hurt consumers and honest businesses.
Dangote is not a monopoly—MAN
In his view, the Director-General of the Manufacturers Association of Nigeria, Segun Ajayi-Kadiri, said Dangote should not be tagged a monopoly because he chose to procure 4,000 CNG-powered trucks for direct fuel distribution to give Nigerians affordable fuel. Ajayi-Kadiri maintained that there’s no monopoly in the downstream and midstream sectors, but there is inefficiency in some other players, which Dangote should not be blamed for.
“There is no monopoly; we have other players in the sector. If they are not playing well, if they are inefficient or comatose, you wouldn’t blame a player. What this one has done is that we are having a positive benefit from a player. There are other refineries, but they have not gone the whole hog,” he stated.
With the government-owned Port Harcourt, Warri, and Kaduna refineries not producing fuel at the moment, the MAN DG said the Dangote refinery would remain the hope of Nigerians to have access to affordable fuel, saying petrol would soon drop to N800 per litre.
In summary, while fears of monopoly in Nigeria’s oil refining sector continue to grow, stakeholders argue that the real threat lies in government inaction, crude supply inequities, and weak policy enforcement. Despite the emergence of private and modular refineries, many remain constrained by limited access to feedstock and financing issues that, if unaddressed, could stifle competition and distort the market.
To prevent this, industry players recommended that the Federal Government enforce the Domestic Crude Supply Obligation, establish a Midstream Refinery Development Fund to support smaller refineries, and promote pro-competition legislation. They also urged policymakers to ensure transparent allocation processes, reduce regulatory bottlenecks, and create a level playing field for all operators to thrive.
