Business Briefings
Fuel Marketers’ profits crash 70% amid deregulation
By: Amarachi Okonkwo
Nigeria’s fuel marketers are grappling with mounting losses and shrinking margins following sweeping industry reforms, with new data showing earnings dropped between 60 and 70 per cent in 2025.
This was revealed in the Nigeria Energy Downstream Industry Report 2025, published by the Major Energies Marketers Association of Nigeria, which highlighted how the sector’s transition to full deregulation and local refining has intensified competition and compressed margins.
According to the report, marketers faced a “sharp decline in profitability,” driven by a combination of intense price competition, rising borrowing costs, elevated logistics expenses, and shrinking marketing margins.
Deregulation and Local Refining Reshape Market
The report, themed “Resilience and Transformation: Nigeria’s Downstream Sector in the Era of Local Refining,” provides a detailed account of the industry’s structural shift from an import-dependent system to a refinery-led supply chain.
A key turning point identified was the operational ramp-up of the Dangote Petroleum Refinery, which significantly altered domestic fuel supply dynamics.
The refinery’s entry into the market has accelerated the displacement of imported refined petroleum products, easing long-standing supply bottlenecks and improving nationwide fuel availability. It also marks the early stages of Nigeria’s transition toward a refinery-anchored ecosystem, positioning the country as an emerging hub in West Africa’s refined fuel market.
However, while consumers have benefited from improved supply stability, marketers have borne the cost of the transition.
Price Wars, Margin Pressure Hit Operators
Under a fully deregulated regime, pricing is now dictated by market forces rather than central controls. While this has improved supply responsiveness, it has also introduced significant volatility tied to foreign exchange fluctuations, global crude prices, and operational costs.
The intensified competition has triggered price wars among operators, severely eroding margins and weakening financial performance across the sector.
This pressure is evident in the results of TotalEnergies Marketing Nigeria Plc, which reported a dramatic reversal in fortunes for the 2025 financial year.
For the first time in over two decades, the company will not pay dividends to shareholders after slipping into losses. Revenue fell by 26 per cent to N767.63bn from N1.04tn in 2024, while profit before tax swung to a loss of N12.46bn, compared to a profit of N42.26bn the previous year. It also posted a loss after tax of N13.85bn, reversing the N27.50bn profit recorded in 2024.
Read Also:
Regulatory Oversight and Market Stability
The report acknowledged the role of the Nigerian Midstream and Downstream Petroleum Regulatory Authority in stabilising the market through enhanced oversight.
Key interventions included intensified anti-smuggling operations, improved pricing transparency, and collaboration on regional petroleum benchmarks aimed at boosting investor confidence.
However, the report cautioned that the presence of a dominant local refinery alone cannot guarantee long-term energy security. It stressed the need for a competitive and open market structure, noting that logistics constraints, throughput variability, and ongoing pricing debates remain critical challenges.
Energy Transition Gains Momentum
Beyond traditional petroleum products, Nigeria is also making strides toward energy transition goals. The report highlighted increased investments in cleaner energy alternatives such as Compressed Natural Gas (CNG), Liquefied Petroleum Gas (LPG), mini-LNG, and renewable energy solutions.
These efforts reflect a broader policy push toward diversifying the energy mix, improving energy access, and aligning with global sustainability targets.
Structural Bottlenecks Persist
Despite notable progress, significant structural challenges continue to threaten the sector’s stability. These include infrastructure deficits, logistics inefficiencies, limited investment inflows, and regulatory uncertainties.
The report emphasised that Nigeria’s transition to a fully integrated domestic refining ecosystem remains uneven and will require sustained policy clarity, institutional strengthening, and improved infrastructure.
Historically reliant on imported refined products due to underperforming state-owned refineries, Nigeria is now undergoing a major industry reset driven by private-sector participation and deregulation.
While the reforms have eliminated fuel subsidies and improved product availability, they have also exposed marketers to global market risks, fundamentally altering cost structures and competitive dynamics.
Despite the current headwinds, the report maintains that Nigeria retains its position as Africa’s leading crude oil producer and one of the continent’s most strategic energy markets.
It concluded that the structural reforms implemented in 2025 have laid the groundwork for deeper industrial growth, improved energy security, and stronger regional relevance provided ongoing challenges are effectively managed.
