Publicly quoted fuel marketing companies in Nigeria recorded a steep decline in profitability in 2025, with earnings indicators dropping by between 60 and 70 per cent, reflecting mounting pressures in the country’s rapidly transforming downstream petroleum sector.
This was disclosed in the Nigeria Energy Downstream Industry Report 2025, which noted that the sector is undergoing a historic transition driven by local refining capacity and full deregulation, but is simultaneously grappling with financial strain caused by rising costs, competition, and market volatility.
The report, published by the Major Energies Marketers Association of Nigeria, stated that publicly listed downstream fuel marketers experienced significant earnings setbacks compared to the previous year.
“Publicly quoted downstream fuel marketers reported sharp declines in profitability, with earnings indicators dropping by an average of roughly 60–70 per cent from the prior year,” the report stated.
It attributed the drop to intense price competition, shrinking marketing margins, rising borrowing costs, and increasing logistics and operational expenses.
According to the report, titled “Resilience and Transformation: Nigeria’s Downstream Sector in the Era of Local Refining,” the industry is shifting from a system largely dependent on imported fuel to one anchored on domestic refining.
The report highlighted the expansion of the Dangote Petroleum Refinery as a major turning point in Nigeria’s petroleum value chain, noting that the facility has significantly altered domestic fuel supply dynamics.
“In 2025, Nigeria’s downstream petroleum sector demonstrated a remarkable structural transformation, driven primarily by the continued integration of domestic refining capacity with broader market deregulation,” the report noted.
It explained that increased local refining capacity has gradually displaced imported refined products, easing long-standing supply bottlenecks and reducing Nigeria’s exposure to volatile international fuel markets.
According to the report, the development also improved fuel availability across the country and signalled the beginning of Nigeria’s transition from an import-dependent fuel economy to a refinery-driven supply system.
However, while consumers have benefited from improved fuel supply and availability, marketers have faced tougher operating conditions.
The report explained that the deregulated market structure has compressed margins as companies compete aggressively on pricing, logistics efficiency, and supply sourcing.
It added that market-driven pricing has introduced greater volatility into retail and wholesale fuel transactions.
“While deregulation improved supply responsiveness, it also exposed the market to sharper price movements, foreign exchange pressures, and cost volatilities,” the report said.
The impact of the changing market conditions has already begun to reflect in the financial performance of major fuel marketers.
For the first time in more than two decades, shareholders of TotalEnergies Marketing Nigeria Plc will not receive a dividend for the 2025 financial year after the company slipped into a loss position.
The firm recorded a 26 per cent drop in revenue to N767.63bn for the year ended December 31, 2025, compared to N1.04tn in 2024, according to its audited financial results released on the Nigerian Exchange Limited.
Profitability weakened sharply as the company posted a loss before tax of N12.46bn in 2025, a reversal from the N42.26bn profit recorded in 2024.
Similarly, it reported a loss after tax of N13.85bn, compared to a profit of N27.50bn in the previous year, underscoring the intense pressure on margins across the downstream sector.
The report noted that marketers are now operating in a more complex environment where pricing is no longer centrally controlled, forcing companies to compete based on operational efficiency, supply sourcing, and logistics capabilities.
It also highlighted the role of the Nigerian Midstream and Downstream Petroleum Regulatory Authority in stabilising the market through regulatory oversight and reforms.
According to the report, the regulator intensified anti-smuggling operations, improved pricing transparency, and collaborated on regional petroleum benchmarks aimed at boosting investor confidence.
Despite the emergence of large-scale local refining capacity, the report stressed that Nigeria still requires a competitive and open market structure to ensure long-term energy security.
“Throughput variability, logistics constraints, and pricing debates showed that no single facility, in isolation, can guarantee long-term national energy security,” it stated.
Beyond petroleum products, the report also noted progress in aligning the downstream sector with global energy transition goals.
It cited increased investments in Compressed Natural Gas, Liquefied Petroleum Gas, mini-LNG infrastructure, and renewable energy solutions as part of efforts to diversify Nigeria’s energy mix and improve access.
Despite these advances, the report warned that structural challenges such as infrastructure deficits, logistics inefficiencies, and regulatory uncertainties continue to threaten the sector’s stability.
However, it noted that the reforms and investments recorded in 2025 have laid the foundation for stronger industrial growth, improved energy security, and greater regional influence for Nigeria in the African energy market.
