Charles Ude: Dangote Fuel Price Cuts Raise Competition Law Red Flags
Nigeria’s downstream petroleum sector may be heading towards a dangerous concentration of market power, despite recent fuel price reductions announced by the Dangote Petroleum Refinery, according to a new legal and economic analysis by Charles Ude, a Lagos-based legal practitioner.
In a paper examining monopoly power and abuse of dominance under Nigeria’s Federal Competition and Consumer Protection Act (FCCPA), 2018, Ude argues that what appears to be consumer-friendly pricing could, in the long run, undermine competition, weaken market resilience, and expose Nigerians to higher prices and fewer choices.
The analysis comes amid growing reliance on the Dangote refinery for domestic fuel supply following subsidy removal and declining fuel imports. Current projections suggest that the privately owned refinery could account for over 90 percent of Nigeria’s petrol supply and virtually all diesel and aviation fuel—an unprecedented level of concentration in a sector critical to national economic stability.
“Competition law is not concerned with monopoly in the abstract, but with dominance and how it is exercised,” Ude said. “Under the FCCPA, dominance becomes a problem the moment it allows a firm to behave independently of competitors, customers, and consumers. In the downstream petroleum market, we are approaching that threshold very rapidly.”
“When a single undertaking controls supply at this scale, pricing power effectively shifts from the market to the firm. That transfer has consequences, not just for competitors, but for consumers and the wider economy, especially in a sector as sensitive as fuel.”
Price cuts and predatory pricing concerns
The Dangote Group recently announced reductions in the gantry price of petrol, reportedly as low as ₦699 per litre, framing the move as an effort to compete with imports and ease pressure on consumers.
While the cuts have been welcomed by many Nigerians struggling with high transport and food costs, Ude cautions that competition law requires regulators to look beyond short-term price relief.
He argues that aggressive pricing by a dominant firm with deep financial reserves could amount to predatory pricing—where prices are set below sustainable levels to force competitors out of the market.
“The danger lies not in cheaper fuel today, but in what happens after competitors exit,” Ude said. “A dominant firm with deep pockets can absorb losses in one sector by cross-subsidising from others. Independent importers and marketers simply do not have that luxury.”
“Once those competitors are weakened or eliminated, the market loses its disciplining force. At that point, prices can rise above competitive levels, consumers lose choice, and efficiency and innovation suffer. That is the classic harm competition law exists to prevent.”
Under Section 72 of the FCCPA and the Abuse of Dominance Regulations, pricing practices that exclude competitors or deter market entry are explicitly prohibited.
Structural dominance beyond petroleum
Ude situates the refinery within a broader pattern of systemic dominance by the Dangote Group across key Nigerian markets, including cement, sugar, and flour—sectors historically protected by import bans and tariff barriers.
He warns that replicating this structure in the petroleum sector could entrench a private monopoly more powerful than the state’s former control of fuel pricing.
“Nigeria risks replacing a flawed state monopoly with a private one that is even harder to regulate,” he said. “When fuel supply becomes dependent on a single corporate actor, the entire economy becomes vulnerable to that firm’s operational decisions, financial strategy, and even internal disruptions.”
“This is not an argument against private investment or local refining. It is an argument for ensuring that success does not translate into unchecked market power.”
Regulatory capture and rent-seeking risks
The paper also raises concerns about rent-seeking behaviour, where dominant firms influence policy and regulation to entrench their position rather than compete on efficiency.
Ude points to pressures for restrictive domestic supply obligations, challenges to competitors’ import licences, and calls for tighter import controls as potential red flags under competition law.
Such practices, he notes, may fall foul of Section 72(2)(c) of the FCCPA, which prohibits conduct that artificially limits production or technical development to the detriment of consumers.
Ude argues that regulatory intervention must go beyond warnings or cease-and-desist orders. Instead, he calls for structural remedies under Section 114 of the FCCPA to preserve competition in the downstream market.
Among his proposals are mandatory disclosure of audited cost and pricing data to detect predatory pricing, and functional or asset separation of logistics and distribution infrastructure to prevent bottlenecks controlled by a single producer.“The goal is not to punish commercial success,” Ude said. “It is to ensure that Nigeria’s markets remain open and competitive, rather than becoming private enclosures governed by unilateral corporate power.”
“Fuel is too important to national welfare and economic security to be left to the unchecked discretion of any single actor, no matter how efficient or well-capitalised.”
As Nigeria restructures its post-subsidy fuel market, the paper adds a legal dimension to the debate—raising a central question for regulators: how to balance local refining success with the long-term health of competition and consumer welfare.
