Analyst Urges Full Withdrawal of NNPCL from Retail Operations to Restore Efficiency in Downstream Oil Sector
Story: Written by Zara October 27,2025
The Nigerian National Petroleum Company Limited (NNPCL), owned entirely by the Federal Government, has been advised to divest from retail operations in the downstream oil and gas sector. The position follows the argument that 65 years after independence, government participation in petrol retailing is no longer justified, given the vibrant presence and capacity of private sector operators.
Industry commentators maintain that numerous private petroleum marketing companies have already demonstrated strong operational efficiency, rendering government-owned NNPC Retail Ltd unnecessary. Notably, the number of major petroleum marketers increased to 27 in 2022, up from the long-standing seven major players that included 11 Plc, Ardova Plc, Conoil Plc, MRS Oil Nigeria Plc, OVH Energy Marketing Ltd, TotalEnergies Ltd, and NNPC Retail Ltd. The sector also has active bodies such as MEMAN, IPMAN, DAPPMAN, and PETROAN representing private retail owners.
Concerns have been raised about the Federal Government’s acquisition of OVH Energy Marketing Ltd by NNPC Retail Ltd on October 1, 2022. Analysts describe the development as a form of reverse privatisation, given that Oando Holdings had originally acquired government shares in Unipetrol Nigeria and Agip Nigeria Plc between 2000 and 2002. OVH Energy, which later became the operator of Oando’s stations, was a privately run enterprise before the acquisition. The transaction has, therefore, been interpreted as the Federal Government reasserting control over an industry previously liberalised for private growth.
Key reasons advanced for the recommended divestment include:
• The acquisition contradicts global privatisation and liberalisation principles by reinforcing government control in a market where private operators already excel. State-owned entities have historically shown poor performance due to bureaucratic bottlenecks and political interference.
• The downstream petroleum market has matured sufficiently and no longer suffers from a lack of local capital or entrepreneurial expertise, which originally justified public enterprise involvement. Expanding NNPC Retail Ltd to an ambitious 1,500 outlets risks creating an inefficient monopoly that crowds out efficient private operators.
• NNPC Retail Ltd reportedly incurred a loss of N395.5 billion in 2024, underscoring inherent structural inefficiencies and financial constraints.
Proponents recommend reversing the OVH Energy acquisition as an initial step, followed by selling 51 percent of NNPC Retail Ltd to core private investors through a competitive bidding process. The remaining 49 percent should be floated on the stock market via an initial public offering to ensure broad-based ownership and transparency.
In addition, comprehensive reforms in the regulatory framework for both the midstream and downstream sectors have been advised to safeguard national economic interests. A fully privatised and efficiently managed petroleum industry is projected to strengthen energy security, enhance logistics, create employment, increase wealth generation, and support the naira through improved foreign exchange earnings.
