The Nigerian downstream petroleum sector is navigating one of its most challenging eras in recent history, marked by persistent underperformance and dwindling investor confidence that continue to cast a shadow over its potential.
Indeed, consistent low margins have disrupted the market, forcing many to either shutdown or scale down operations in a bid to reduce losses.
But to survive the stormy period, industry experts, especially marketers argue that healthy competition and multiple sources of refined petroleum products could be the game changer which they maintain remained the panacea that would serve as the catalyst for the revival and long term growth of the downstream sector.
The downstream sector, which spans across; refining, distribution, and marketing of petroleum products, has long been constrained by poor infrastructure, regulatory bottlenecks, and monopolistic practices. However, with the partial removal of fuel subsidies and the liberalisation of product pricing, stakeholders see an opportunity for market-driven reforms to flourish.
Despite the prospects, stakeholders warn that the success of a competitive downstream market depends on regulatory clarity and macroeconomic stability. Yet, experts caution that no single refinery can meet national demand alone — making importation an essential bridge to energy stability.
As Nigeria seeks to reposition its energy landscape, competition and strategic importation, if effectively managed, may just be the long-awaited spark to unlock the potential of its downstream sector — bringing jobs, stability, and investor confidence back into play.
A petroleum engineer and energy analyst, Mr. John Abebe,noted that competition — when properly regulated — will drive efficiency and transparency.
“Once multiple players are allowed to import and sell products based on market dynamics, prices will begin to stabilize, and consumers will benefit from better quality and availability,” he said.
Abebe added that opening up the market would also attract investment in storage, transportation, and retail infrastructure.
“The government must create a level playing field where all marketers have fair access to foreign exchange, ports, and distribution networks,” he advised.
Marketers under the aegis of Independent Petroleum Marketers Association of Nigeria (IPMAN) have also echoed this position. Its National Publicity Secretary, Mr. Chinedu Ukadike, emphasised that allowing more players to participate in product importation will solve persistent high pricing and encourage local refining in the long term.
“It’s about giving everyone a chance to compete, and in doing so, the sector becomes more responsive and efficient,” he said.
In his submission, energy policy analyst, Mr. Ayodele Oni, posited that Nigeria needs to build trust in market institutions.
“Investors are watching. If they see fairness, transparency, and enforcement of standards, they will come in,” he noted.
Some marketers also stress the importance of transitional support for local players.
“We need policies that will not only encourage competition but also protect indigenous businesses from being crowded out by bigger, foreign firms,”.
Legal Advisor, International Law, Organization of the Petroleum Exporting Countries(OPEC), Mr.Taiwo Ogunleye, said that competition and importation of petroleum products will stimulate Nigerian energy sector and ensure value for money for users of petroleum products in Nigeria.
Ogunleye added that the importation of petroleum products is in alignment with the Petroleum Industry Act (PIA).
He stated that there is the need to protect Nigerians from monopolistic practices, adding that liberation of the petroleum product market would prevent unfair and other harmful practices on customers.
The lawyer warned that monopoly in the downstream and midstream sub-sector could pose energy security risk for the nation, encourage harmful practices, undermine customer’s choice availability and less value for their money.
Ogunleye explained that a competitive market structure in the midstream and downstream sectors of the petroleum industry exists when multiple market players can freely enter, compete, and operate under fair and transparent conditions.
He stated that in basic terms, this denotes that there is no monopolistic dominance, controlled governmental interference beyond regulation that ensures fairness, sufficient infrastructure access for market participants, transparent pricing mechanisms, and opportunities for innovation and investment.
He stated that various sub-issues indicating a free and competitive market include open and equitable access to infrastructure, market-driven and transparent pricing, absence of regulatory impediments, and strong enforcement mechanisms, ensure sustained competition benefiting the overall petroleum market performance, stakeholders, and consumers.
He noted that anti-competitive market practices and behaviour in the midstream and downstream petroleum industry are activities performed by companies to undermine fair competition, negatively impacting market efficiency, prices, and consumer choices.
He said that such practices may include price fixing, collusion, predatory pricing, market allocation, monopolization or abuse of dominance, exclusive contracts, unfair restrictions in distribution and retail operations, refusals to supply or deal, discrimination in pricing, or limiting infrastructure access to competitors.
He warned that ́these behaviours distort market conditions, creating artificial barriers for new entrants or smaller players, undermining transparency in the pricing process, harming consumer welfare, and hindering innovation and improvements in service quality.
Also commenting, Non-Executive Director , Aspen Energy, Mr.Isreal Aye, said that the benefits of competition for consumers are lower and fairer prices at the pump; improved service delivery at filling stations; product innovation and transparency and incentivizes modular refineries and new entrants
“Anticompetitive behaviours in the petroleum midstream and downstream sectors refer to behaviours that reduce or limit competition in markets, which can produce severe detrimental economic effects, distorting market outcomes, harming consumer welfare, discouraging necessary investments, and undermining industry efficiency, and often lead to inflated prices and poor service delivery.
The impacts are especially severe in countries with developing regulatory institutions or in transitioning markets. ́Strict regulatory oversight and enforcement, transparent market access rules, and competitive pressure remain essential to minimize these serious consequences,”.