‘Oil Marketers Dump NNPCL Franchise, Rebrand Filling Stations Amid Price War’

Amidst stiff competition in the downstream oil sector, several oil marketers have begun removing the Nigerian National Petroleum Company Limited (NNPCL) logo from their filling stations, opting to terminate franchise agreements with the national oil firm.

The move comes in response to the recent crash in refined product prices triggered by the $20bn Dangote Petroleum Refinery, which has reduced loading costs of Premium Motor Spirit (PMS), making it more attractive for independent marketers.

Findings by Punch revealed that some NNPCL-branded stations along the Lagos-Ibadan Expressway, including Wawa and Ibafo, have already dropped the national oil company’s identity and are rebranding under private ownership.

More filling stations in Lagos and surrounding states are expected to follow suit as marketers seek lower-cost supplies from Dangote Refinery and other private importers.

According to the National Publicity Secretary of the Independent Petroleum Marketers Association of Nigeria (IPMAN), Chinedu Ukadike in an interview with Punch, the departure from NNPCL’s franchise model is driven by economic factors and the evolving market landscape.

The recent price cut by Dangote Petroleum Refinery, which slashed its loading cost from ₦950 to ₦890 per litre, has intensified competition among marketers, further incentivizing them to abandon NNPCL’s supply chain.

Ukadike explained that independent marketers now have more flexibility to source fuel at cheaper rates without being tied to NNPCL’s pricing structure.

He said, “Yes, that observation is correct. Some marketers are changing and rebranding. Remember that there was a time NNPCL was the sole distributor and importer of petrol. So, marketers then gave their filling stations as franchises so that they could get products.

“So marketers normally give their companies to NNPCL to be able to have petroleum products. But now that the game has changed, you can even see some marketers now changing to MRS filling stations. Because MRS is now selling cheaper than any other station.

“People want where they want to get turnover and return on investment. If you are carrying Total on as a brand name and Total is not giving you petrol products, what is the sense of carrying the name? You have to remove it and get a better alternative. Most of those filling stations (that are changing name), NNPC don’t own them. NNPC only collected them on the franchise.”

An oil and gas expert, Olatide Jeremiah, who confirmed the arrangement, said marketers used the franchise licence as a method to secure cheaper products from NNPCL which was still importing at the time.

He confirmed that the avenue that provided more revenue was disrupted by the emergence of the Dangote refinery and the inability of the national oil firm to secure an agreement to fix petrol prices with the Lekki-based plant.

Jeremiah, who is the Chief Executive Officer of petroleumprice.ng noted, “Yes, it’s true. It all happened after the subsidy was removed but before the emergence of the Dangote refinery.

“After the removal and petrol price went up, NNPCL was asked to manage the price and should not be allowed to keep skyrocketing. So NNPCL and the majors were pegging the price at ₦500 but the landing cost was above the amount. This affected importers and independent marketers who imported fuel. For instance, Petrocam imported and claimed that its landing cost was ₦700 but the majors and NNPCL were selling at ₦500 per litre. That is a difference of ₦200 and was a huge loss.

“So actually NNPCL was subsidising internally and when independent marketers noticed this and were losing sales, they began applying for NNPCL franchise lincence. The marketers paid millions to get the franchise licence because they were loading from NNPCL depot at a cheaper rate.

“NNPCL was the one dictating price for all the majors at that time because of public outcry and they used to buy, till Dangote came in. They also wanted to do the same thing with Dangote to fix the price but the arrangement didn’t work because Dangote wanted to sell to everyone. Its price was better and independent marketers could buy directly.

“The franchise licence was also an avenue to make more profit because some marketers got licence for one of their stations but would transport products to other stations and sell at a higher price to Nigerians. The slot of getting fuel tankers at that time was twice in a month.”

The Chairman of PETROAN in Lagos State, Akinola Ogunyolemi, said most of the outlets are not originally owned by the NNPC.

He said the removal of the NNPCL symbol might mean the end of an agreement or a breach of it by either party.

“These are individual outlets. What they do is that, if an NNPCL contract expires and they are not ready to move forward with them or if they get a juicy offer, they will remove the NNPCL logo. They will rebrand again and put other people’s names. That could be the reason.

“Most of the outlets are not NNPCL-owned. You can have your filling station built and put NNPCL there, with your contract to them. Maybe they could not meet up with your agreement with them, (because they too also have some breach of contract sometimes), you might decide to go and give the station to Mobil or Total. It is yours,” Ogunyolemi said.