Nigerians expected diesel, kerosene, and Liquefied Petroleum Gas (LPG) prices to crash as Dangote Refinery and the Nigerian National Petroleum Company Limited (NNPCL) battle for market control. With global crude oil prices falling below $75 per barrel, many hoped for cheaper fuel. But despite this competition and lower crude costs, prices remain stubbornly high. Why aren’t Nigerians seeing bigger price cuts?
Dangote vs NNPCL: The Price War Isn’t for Every Fuel
Since Dangote Refinery began operations in 2024, it has shaken up the fuel market, forcing NNPCL to lower prices. As of February 2025:
- Dangote’s ex-depot diesel price dropped from ₦1,200 to ₦1,020 per litre.
- NNPCL responded by adjusting diesel to around ₦1,050 per litre.
- Petrol prices fell to ₦825 per litre from Dangote and ₦860 from NNPCL.
However, the same aggressive price cuts haven’t extended to kerosene and LPG. Dangote’s refinery can produce over 1 million metric tonnes of LPG annually, yet retail prices remain above ₦1,200 per kilogram. A 12.5kg cylinder still costs over ₦15,000.
This price war is mainly affecting petrol and diesel, while kerosene and LPG remain costly.
Falling Crude Oil Prices Aren’t Enough
Crude oil prices have fallen from $80 to below $75 per barrel in early 2025. Since diesel, kerosene, and LPG come from crude, their prices should be falling too.
But that’s not happening because Nigeria’s currency is weak. The naira trades at over ₦1,600/$1, wiping out the gains from cheaper crude.
- Dangote, which sources crude locally and internationally, still pays in dollars.
- NNPCL, which imports much of its LPG, also faces high costs due to the weak naira.
A $5 drop in crude prices helps, but it’s not enough to significantly cut retail fuel prices when exchange rates and other costs remain high.
High Operating Costs Keep Prices Up
Even when crude oil prices fall, the cost of refining and distributing fuel in Nigeria remains high.
- Kerosene: Many rural homes depend on it for cooking, but poor road networks make transportation costly. Even with slight ex-depot cuts, pump prices remain above ₦900 per litre.
- Diesel: Used for trucks, factories, and generators, its price stays above ₦1,100 per litre in many areas due to high transport costs.
- LPG (Cooking Gas): Storing, bottling, and transporting gas cylinders is expensive. Even with Dangote’s local supply, a 12.5kg cylinder still costs over ₦15,000.
These costs don’t reduce just because crude oil prices drop.
Government Pricing Policies Limit Price Cuts
Even though petrol subsidies ended in 2023, the government still influences fuel prices.
- NNPCL plays a dual role as a business and a state-owned entity that ensures price stability.
- Regulators like the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) add taxes, levies, and transport fees that increase fuel costs.
The government wants prices to be stable, not to fall too quickly.
- Kerosene: The authorities keep it affordable but don’t slash prices too much to avoid supply shortages or hoarding.
- Diesel: Used in transportation and agriculture, price cuts are controlled to prevent economic shocks.
- LPG: Even with Dangote’s supply, the government follows global pricing benchmarks instead of allowing a price crash.
This is why the price war isn’t bringing dramatic cuts for these fuels.
Nigerians Keep Buying, So No Need for Big Discounts
People will buy kerosene, diesel, and LPG no matter the cost.
- When diesel hit ₦1,400 per litre in 2024, truckers and businesses kept buying.
- When LPG rose past ₦1,300 per kilogram, urban households still bought it.
- Kerosene is a necessity for many rural homes, whether it costs ₦500 or ₦1,000.
Since demand doesn’t drop, suppliers don’t have to cut prices aggressively to attract buyers.
Why Petrol Prices Drop Faster Than Diesel, Kerosene & LPG
Petrol gets more attention because it affects millions of Nigerians directly and is a political issue.
- Kerosene and diesel cater to specific groups, rural households and industries who don’t protest high prices as much.
- LPG is growing in popularity, but supply chain issues prevent drastic price reductions.
This is why petrol prices drop faster than kerosene, diesel, and LPG.
Profit Comes Before Price Cuts
Neither Dangote nor NNPCL is willing to operate at a loss.
- Dangote is cutting diesel prices to compete, but not enough to lose money.
- NNPCL is adjusting prices carefully to maintain profitability.
That’s why:
- Kerosene remains above ₦900 per litre.
- Diesel stays above ₦1,100 per litre.
- LPG is still over ₦1,200 per kilogram.
Despite the competition, both companies are pricing their products to ensure profitability.
As of March 7, 2025, the price war between Dangote and NNPCL has led to slight price reductions, but not as much as Nigerians hoped especially for kerosene, diesel, and LPG.
- Lower crude oil prices haven’t translated to cheap fuel due to the weak naira.
- High operating costs, government policies, and steady demand keep prices up.
- Petrol prices drop faster because of political and economic pressure, while kerosene, diesel, and LPG don’t get the same treatment.
- Dangote and NNPCL are in business to make profits, so price cuts will always be measured.
Retail outlets price manipulation is also a major factor, as most retails outlets buy these products lesser and sell higher, As soon as prices are about to go up, they hoard their products and sell higher.
