Fuel marketing companies are facing a severe squeeze in Nigeria’s downstream petroleum market, with earnings dropping sharply as competition tightens and operating costs rise.
This is according to the Nigeria Energy Downstream Industry Report 2025 issued by the Major Energies Marketers Association of Nigeria, which examined how operators are coping with deregulation and the shift toward domestic refining.
The report indicates that profitability indicators for publicly quoted marketers fell by about 60 to 70 per cent compared to the previous year. The decline was attributed to aggressive price competition, slimmer marketing margins, higher borrowing costs, and increased expenses linked to transportation and distribution.
A major driver of the pressure is the expansion of local refining capacity, particularly the growing output from the Dangote Petroleum Refinery. As more refined products are sourced locally rather than imported, supply has improved across the country, but marketers now compete more fiercely for customers in a fully deregulated pricing environment.
With prices largely dictated by market forces, companies are more exposed to swings in crude oil prices, foreign exchange rates, and logistics costs. This has forced marketers to focus more on efficiency and supply chain optimisation to remain competitive.
The strain is already visible in company performance. TotalEnergies Marketing Nigeria Plc posted a loss after a sharp fall in revenue, resulting in the suspension of dividend payments to shareholders for the first time in over two decades.
The report also points to the efforts of the Nigerian Midstream and Downstream Petroleum Regulatory Authority to stabilise the market through improved oversight, anti-smuggling measures, and greater pricing transparency.
Despite the progress made through local refining, challenges remain. Infrastructure limitations, distribution bottlenecks, and regulatory uncertainties continue to complicate operations across the downstream value chain.
The study adds that investment is gradually expanding into alternative energy solutions such as Compressed Natural Gas, Liquefied Petroleum Gas, mini-LNG projects, and renewable energy as part of a broader effort to diversify Nigeria’s energy sources.
While the downstream sector is undergoing a significant transformation away from import dependence, the report concludes that marketers are bearing the financial brunt of the transition in the short term as the market adjusts to new realities.
