Key highlights
- Fuel subsidy removal could lead to some companies becoming bigger players in the downstream sector, as they may be better positioned to handle the higher costs associated with distributing and selling fuel.
- The removal of fuel subsidies is likely to have significant impacts on the country’s downstream sector, including oil companies, distributors, and consumers.
- The Nigerian National Petroleum Company is currently the sole importer of fuel in the country.
Fuel subsidies have been a contentious issue in Nigeria for many years. The government spends billions of naira every year to subsidize fuel prices, keeping them artificially low for consumers.
However, this policy has been criticized for being inefficient and prone to corruption, with some of the subsidized fuel being smuggled out of the country and sold at a higher price in neighboring countries.
If the Nigerian government decides to remove fuel subsidies by June 2023, it is likely that the price of fuel will increase, potentially to N400 per liter or higher. This increase could have several effects on the downstream sector, which includes companies involved in the refining, distribution, and marketing of petroleum products.
On the one hand, companies that are well-positioned to adapt to the new price regime could benefit from the removal of subsidies. They may be able to pass on the higher costs to consumers and maintain their profit margins. These companies may also have the opportunity to increase their market share if their competitors are unable to adapt to the new price regime.
Meanwhile, companies that are less prepared for the removal of subsidies could face significant challenges. They may struggle to maintain their profit margins and could be forced to cut costs or even go out of business. This could lead to consolidation in the downstream sector, with larger companies becoming even more dominant.
Overall, the impact of the removal of fuel subsidies on the downstream sector in Nigeria will depend on a range of factors, including the specific policies implemented by the government, the ability of companies to adapt to the new price regime, and the level of competition in the market.
Largest petroleum products importer in Nigeria
A representative of the Independent Petroleum Marketers Association of Nigeria (IPMAN) in the Southwest region, told Nairametrics that the Nigerian National Petroleum Company (NNPC) Limited is the sole importer of petroleum products in the country in the last three to four years.
According to the independent marketer, no IPMAN member has been granted a license to import petroleum products. He however expressed hope of a change in the situation after the fuel subsidy is removed and the local refineries and modular refineries are working at full steam alongside the Dangote refinery.
Who owns the largest market share in diesel, fuel, and kerosene in Nigeria?
In a separate conversation, the National Operations Controller of IPMAN, Mr. Mike Osatuyi explained that the association’s 30,000 members do not market aviation fuel but focus on marketing fuel, diesel, and kerosene. He also highlighted the fact that IPMAN controls 70% of the market share in the sale and distribution of fuel, diesel, and kerosene in the country.
On fuel subsidy removal
According to Mr. Osatuyi, the removal of the fuel subsidy will benefit the country especially if the local refineries are running at full capacity alongside the 650,000 barrels per day Dangote refinery. He also said that the removal of fuel subsidy will be good for everyone in the country, stating that the removal meant free entry, and free exit for stakeholders in the market.
Mr. Osatuyi said that IPMAN is ready to work with all stakeholders to ensure a better working system in the country’s petroleum industry. He also called on the federal government to ensure that whatever money is saved from the subsidy regime, is used to deliver effective social welfare programs to Nigerians.
Largest fuel distributors in Nigeria
An energy expert and member of the Major Oil Marketers Association of Nigeria (MOMAN) told Nairametrics that currently, the largest fuel distribution chain is the Nigerian National Petroleum Company (NNPC) Limited. This is because, in 2022, NNPCL acquired Oando’s downstream company, adding 380 retail stations to its 500 stations.
However, there are other players in the sector who will emerge, big players, after the fuel subsidy is eventually removed. Below is a list of the top fuel marketers in the country as approved by NNPCL:
TotalEnergies Marketing Nigeria
TotalEnergies Marketing Nigeria Plc commissioned its first Filling Station at Herbert Macaulay Street, Yaba, Lagos in 1956. Today, the company has over 570 service stations, 19 customer service centers, numerous industrial outlets, 5 depots, distribution plants, and warehouses with high safety standards spread across the Western, Northern, and Eastern territories in Nigeria.
TotalEnergies is also a founding member of the International Joint Inspection Group (JIG). The mission of the JIG is to promote safety, quality control, and efficiency at aviation fuel facilities and develop greater global standardization of aviation fuel operating standards.
TotalEnergies provides the two major products in the Nigerian aviation industry: Avgas (Aviation Gasoline) Aviation Turbine Kerosene (also called Jet A-1), and Aviation Gasoline. Total Nigeria Plc is the sole marketer of Avgas in Nigeria.
MRS Oil Nigeria Plc
MRS Oil Nigeria Plc is a fully integrated and efficient downstream player. It is one of the largest and leading marketers of refined products, including quality gasoline, marine, and aviation fuels in the downstream industry in Nigeria. We market premium fuels under the MRS brand across 416 retail service stations strategically spread all over Nigeria.
Conoil Plc
Conoil is engaged in the marketing of refined petroleum products and also in the manufacturing and marketing of high-quality lubricants and chemicals for domestic and industrial use. It is engaged in retail, aviation, lubricants, gas, and commercial and industrial (C&I) business and is represented in major cities such as Ibadan, Warri, Port Harcourt, Kano, Abuja, Maiduguri, Jos, Benin, Calabar, Enugu, Bauchi, and Ilorin. It has over 300 retail stations across the country.
Ardova Plc
Ardova Plc is a leading indigenous player in the downstream Oil, Gas, and integrated Energy sector through a network of over 500 retail outlets and significant storage facilities in Apapa, Lagos, and Onne, Rivers State. Ardova Plc specializes in the procurement and distribution of Premium Motor Spirit, Dual Purpose Kerosene, Diesel, and Liquefied Petroleum Gas.
Ardova Plc is also a trusted supplier of choice for aviation fuels (Jet A1) to various local and international airlines, whom they provide aircraft refueling services through their aviation joint user hydrants in Ikeja, Lagos, and joint aviation depots in Abuja, Port-Harcourt, and Kano. Some of their customers include DHL, Lufthansa, Virgin Atlantic, World Fuel Services, Air Peace, Arik Air, Max Air, Execujet, Chevron, and ValueJet.
11 Plc
11 Plc was formerly known as Mobil Oil Nigeria. The company delivers premium motor spirit (PMS), diesel, kerosene, and aviation fuel to its customers across the country through its over 250 retail stations across the country.
NNPC Retail Limited
NNPC Retail Limited is a fully owned subsidiary of the Nigerian National Petroleum Corporation (NNPC) that operates in the Downstream Sector of the Nigerian Oil and Gas Industry. The company provides PMS, diesel, aviation fuel, and kerosene to Nigerians through over 500 service outlets spread across the country.
In 2022, NNPC Retail Limited acquired the Oando retail brand called OVH Energy Marketing – the previous owner and operator of the Oando branded retail service stations. The acquisition added 380 retail stations to NNPC Retail Limited stations, making it the biggest downstream company in Nigeria.
During the acquisition ceremony, the NNPCL Board Chairman, Senator Margery Chuba-Okadigbo said that as a result of the acquisition, additional 380 filling stations would be added to the 500 stations that NNPC already had.
A.Y.M Shafa Limited
A.Y.M Shafa Holdings Limited is an innovative indigenous petroleum marketing company and an amalgamation of businesses serving different sectors of the Nigerian economy. The company has over 150 retail stations across the country.
A.A. Rano Nigeria Limited
The company deals in the wholesale and retail distribution of petroleum products, storage and haulage of petroleum products, oil exploration and lifting, and trading and importation of petroleum products. The company has over 115 retail outlets spread across Nigeria.
BOVAS and Company Limited
BOVAS group was established in 1980 and started operations as an indigenous independent petroleum marketing company. The company sells fuel, diesel, and kerosene among other petroleum products. The company has over 150 retail stations across the country.
NIPCO Plc
NIPCO Plc is a significant player in the downstream sector and has about 205 branded retail outlets spread across the country. NIPCO markets fuel and diesel alongside compressed natural gas and liquefied petroleum gas.
Rainoil Limited
Rainoil is an indigenous integrated oil and gas company. It markets fuel and has over 100 stations across the country. The stations are strategically located in major cities such as Lagos, Abuja, Kaduna, Port Harcourt, Calabar, Uyo, Enugu, Onitsha, Asaba, Makurdi, Sapele, Lafia, Keffi, etc.
Matrix Energy
Matrix Retail business officially started in the year 2014. The company has 70 fully established retail outlets across 27 states of Nigeria and 4 new stations under construction at different locations across the country, The company is working on increasing its outlets to 81 by end of 2023.
Northwest Petroleum & Gas Limited
The company is an indigenous petroleum products marketing company with vast experience in the export, import, trading, storage, and supply of crude oil and refined products. The company owns 24 to 26 filling stations in the country.
Swift Oil
Swift Oil is a major downstream Oil & Gas company in Nigeria with a head office in the commercial city of Lagos. As one of the fastest-growing companies in the Oil & Gas sector of the Nigerian economy.
Nepal Energies
Nepal Energies has a well-rounded distribution channel that is used to make timely supplies of diesel, fuel, and Jet A1, to any offshore location as well as on land sites. Sorties Logistics is a subsidiary of Nepal Energies that ensures that logistics needs are covered.
Mainland Oil & Gas Limited
Anambra State-based Mainland Oil and Gas Co. Ltd is a subsidiary of the Chrisnak Group of Companies and was incorporated in 2003 to proffer an all-around solution to consumers in the downstream sector of the Nigerian Petroleum Marketing Industry. The company markets fuel and kerosene.
Emadeb Energy
Emadeb Energy Services Limited a wholly indigenous private company incorporated in 2007, commenced business in 2008. The company has successfully received and trucked out Refined Petroleum Products in excess of 1,200,000MT allocated by PPPRA under the PSF/APF scheme and PPMC under the Bulk Purchase Agreement.
Asharami Synergy Plc
Asharami Synergy (Sahara Group downstream company) has operations across West Africa and promotes roadway hospitality by providing differentiated fuel stations and offering higher levels of service.
Asharami Synergy Limited, which is Nigeria’s first indigenous energy company to operate as an independent Aviation Fuel Marketer, controls about 25% market share in the industry, operating as the preferred aviation fuel market for local and international airlines.
Damas Oil & Marine Services Limited
Damas and Marine Services Limited was established in 2007 as an affiliate of Adan Mansoor Nig Ltd. DAMAS is a wholly owned Nigerian company incorporated under the laws of the Federal Republic of Nigeria, with over 37 years of consolidated experience in Marine and EPCI Project in the Oil & Gas industry.
Pinnacle Oil & Gas Limited
Pinnacle is an Indigenous Oil and Gas Company active across the entire downstream value chain, with emphasis on the petroleum trading, marketing, distribution, and retail segments of the Nigerian Oil and Gas Sector. They are marketers of fuel, diesel, aviation fuel, and kerosene
Danmarna Petroleum
Danmarna Petroleum is a Katsina state-based oil and gas company that markets fuel and diesel alongside other petroleum products. Danmarna Petroleum Limited was established in 1997 and currently operates with over 70 petroleum stations located in Katsina State and across the country.
Other approved fuel marketers include Zamson Global Resources. Hong Nigeria Limited, Shema Petroleum Limited, Optima Energy Resources.
Government should motivate this big players so that they can come together and acquire and operate a refinery