Dangote Refinery Reshapes Nigeria’s Fuel Market, Disrupts Decades-Old Power Structures in the Petroleum Sector
Story: written by Uzuh Rita September 22,2025
The commencement of direct petrol sales from the $20 billion Dangote Petroleum Refinery has ignited a profound transformation in Nigeria’s downstream oil and gas industry, unsettling entrenched players who once held sway over the nation’s fuel supply chain.
From private depot operators and petroleum importers to labour unions and state-owned refineries, the mega complex in Lekki is dismantling an ecosystem that for decades thrived on import dependence, subsidy regimes, and logistical middlemen.
A new order emerges
With a daily refining capacity of 650,000 barrels of crude, the Dangote plant is designed not only to satisfy Nigeria’s domestic demand but also to export surplus volumes to markets across Africa, Europe, and North America. Aliko Dangote, Africa’s richest man and chairman of Dangote Industries, has pitched the facility as the ultimate antidote to Nigeria’s chronic fuel scarcity, pledging reliable, affordable, and cleaner energy for millions.
By leveraging its own distribution fleet—consisting of thousands of compressed natural gas (CNG) trucks—the refinery has effectively reduced the need for costly intermediaries, upending the traditional depot-to-retail structure. Already, several private depots around Lagos and neighbouring states report drastically reduced operations as marketers opt to lift products directly from Dangote’s gantries.
Private depots face obsolescence
The Depot and Petroleum Products Marketers Association of Nigeria (DAPPMAN), which invested heavily in jetties, storage terminals, and pipelines during the import-dependent years, now faces an existential threat. Industry experts warn that assets financed through heavy bank loans risk becoming stranded, potentially triggering widespread defaults.
The dispute deepened after Dangote Refinery disclosed that DAPPMAN demanded an annual subsidy of ₦1.505 trillion to offset additional logistics costs—an amount the refinery insists would unfairly burden Nigerian consumers.
Importers sidelined
Petrol importers, long accustomed to profiting from subsidy loopholes and foreign exchange arbitrage, have been all but pushed out of the market. Their influence is fading in the face of Dangote’s dominance, leaving a once-powerful bloc scrambling for relevance.
Yet concerns remain about centralised distribution. Some experts argue that even with 10,000 trucks, no single operator can seamlessly service Nigeria’s vast geography without bottlenecks, raising fears of delivery delays and possible job losses in the transport sector.
State refineries in decline
Nigeria’s state-owned refineries in Warri, Kaduna, and Port Harcourt, despite ongoing rehabilitation, appear ill-equipped to compete on either cost or efficiency. Analysts suggest the government may need to repurpose them rather than pour billions more into projects that risk permanent unprofitability.
Labour tensions
The shift has also rattled labour unions. The Nigeria Union of Petroleum and Natural Gas Workers (NUPENG) has accused Dangote of undermining collective bargaining by directly hiring drivers for its CNG fleet. The refinery insists union rights are recognised, but the standoff has sparked threats of industrial action.
Dangote counters that the 4,000 trucks will generate at least 24,000 jobs, with drivers earning far above Nigeria’s minimum wage and benefiting from housing and welfare schemes.
Market-wide ripple effects
Haulage firms, tanker operators, and suppliers across the value chain are also feeling the shockwaves. Many report cancelled contracts and dwindling demand, as Dangote’s integrated logistics model consolidates control over distribution.
Benneth Korie, president of the Natural Oil & Gas Suppliers Association of Nigeria (NOGASA), has warned that the refinery’s approach could jeopardise thousands of livelihoods. Still, he reaffirmed the association’s commitment to balancing business survival with national energy need
The Dangote Refinery has not only redrawn Nigeria’s petroleum map but also forced a reckoning among old power brokers, unions, and state enterprises. Whether this disruption ushers in a new era of energy security or deepens social and economic fractures will depend on how quickly stakeholders adapt to the refinery’s towering influence.
