For decades, the Nigerian downstream petroleum sector has been defined by a singular, paralyzing narrative: the paradox of a crude-rich nation utterly dependent on imported refined products. It was a narrative that defied economic logic, enriched a select few, and impoverished the collective commonwealth. As we stand in December 2025, however, the tectonic plates of this industry have shifted irrevocably. The recent announcement by the Independent Petroleum Marketers Association of Nigeria (IPMAN) to prioritize the patronage of the Dangote Petroleum Refinery and, more ambitiously, to venture into refinery ownership, marks the final nail in the coffin of the importation regime.
As a consultant who has observed the intricate dance of Nigeria’s oil economy for many years, I view this development not merely as a business decision but as a patriotic realignment. After years of friction, hesitation, and what I have often termed “regulatory inertia,” the decision by IPMAN to align with domestic refining capacity is a triumph of economic rationality over the rent-seeking models of the past. The era of the “mercantile marketer”, whose sole value proposition was the arbitrage of imported fuel is over. We are now entering the age of the “industrial marketer,” one who adds value through production, distribution efficiency, and national energy security.
The Collapse of the Importation Arbitrage
To understand the magnitude of IPMAN’s recent directive, we must first appreciate the context of the resistance that preceded it. For years, the Nigerian oil and gas sector was structured around the ease of importation. The lack of functional local refineries created a vacuum that was filled by a powerful cabal of importers. These actors thrived on the subsidies, the foreign exchange differentials, and the inefficiencies of the Nigerian National Petroleum Company Limited (NNPCL). It was a system designed for dependency.
I recall vividly when Mr. Femi Otedola, a titan of the industry and the original architect of what would become the modern independent marketing structure, issued a stark warning to his peers. He cautioned depot owners and marketers to sell off their tanks and dismantle their depots because the dynamics had fundamentally changed. His argument was prescient: with the coming onstream of the Dangote Refinery, a 650,000 barrels-per-day behemoth, the business model of importing fuel into Nigeria would become obsolete.
Otedola’s warning was ignored by many who believed that the status quo was immutable. They believed that the “Nigerian factor”, political maneuvering and regulatory capture, would keep the importation gates open. They were wrong. The sheer scale of the Dangote Refinery, coupled with the inevitable deregulation of the sector, has rendered the importation model not just unpatriotic, but commercially suicidal. You cannot compete with a producer who refines locally, bypassing the freight costs, insurance premiums, and lightering expenses associated with importation.
The Onoda Principle: Fighting a War That Is Already Over
In my analysis of this transition, I have frequently referred to what I call the “Onoda Principle.” This concept is derived from the story of Hiroo Onoda, the Japanese intelligence officer who spent 29 years in the jungles of the Philippines, fighting a World War II that had ended in 1945. Onoda refused to believe the war was over; he continued to hoard ammunition, survey “enemy” territory, and live in a state of perpetual combat readiness, unaware that the world had moved on.
For the past two years, many players in the Nigerian downstream sector have been operating on the Onoda Principle. They have been fighting a war for import licenses, fighting for access to forex, and fighting to maintain a supply chain that the rest of the world (and indeed the Nigerian economy) has moved past. They were clinging to the jungle of importation while the metropolis of local production was being built in Lekki.
IPMAN’s recent pivot is the moment they finally walked out of the jungle. By directing members to buy from Dangote and acknowledging that “continuous import is not an acceptable parallel business model,” IPMAN President Abubakar Shettima has effectively surrendered to the reality of the new age. This is not a defeat; it is a liberation. It frees the marketers from the volatility of the international spot market and the humiliations of the forex bidding wars. It allows them to focus on what they do best: the efficient distribution of products to the nooks and crannies of Nigeria.
The Strategic Imperative of Refinery Ownership
While the partnership with Dangote is the immediate headline, the more significant long-term development is IPMAN’s declared intention to venture into refinery ownership. This is the “patriotic move” that deserves the highest commendation. For too long, Nigerian marketers have been content to be middlemen. The shift towards becoming manufacturers is the evolution our economy desperately needs.
If IPMAN can pool the resources of its thousands of members to build or acquire refining assets, they will transform from being vulnerable price-takers to powerful price-makers. This aligns perfectly with the advice that if they are afraid of a monopoly, the solution is not to run to Malta or Rotterdam to import fuel; the solution is to build capacity here at home. “If you can’t beat him, join him” in the industrialization of Nigeria.
This move would also serve as a vital hedge for the nation. While the Dangote Refinery is a game-changer, no nation of Nigeria’s size should rely on a single asset for its energy security. An IPMAN-owned refinery would provide the necessary redundancy and competition, domestic competition, that forces efficiency and drives down prices for the common man. It would create a robust ecosystem where multiple local producers vie for the consumer’s wallet, not by who has the best connection at the Central Bank for dollars, but by who runs the most efficient plant.
The Elephant in the Room: The Obsolescence of State Refineries
While we celebrate the private sector’s pivot toward functionality, we must confront the lingering ghost in the machine: the comatose state-owned refineries in Port Harcourt, Warri, and Kaduna. It is time for the government and the NNPCL to face a harsh, unvarnished reality, these assets are relics of the 20th century trying to survive in an algorithmic age. They are analogue behemoths in a digital world, and no amount of “Turn Around Maintenance” (TAM) can reverse the arrow of time.
The economic rationale for holding onto these refineries has collapsed. They were constructed with technology that is now two generations behind; in many cases, the original manufacturers of their components have long since ceased production of the necessary spare parts. We are effectively trying to repair a steam engine with parts from a Tesla factory, it is a futile, capital-intensive exercise in nostalgia. The billions of naira sunk annually into these “rehabilitation” projects are not investments; they are sunk costs poured into a black hole.
Furthermore, we must address the difficult issue of labor. It is an economic aberration to maintain a full workforce for refineries that have not refined a single drop of fuel in years. We are currently paying humongous salaries to staff who, through no fault of their own, are redundant. This is not a charity organization; it is a national oil company. In a sector driven by margins and efficiency, keeping thousands of workers on the payroll for zero output is fiscal irresponsibility.
The bold, necessary step is privatization or liquidation. The government must sell these assets to willing buyers, private entities with the capital and technical expertise to either overhaul them completely or, more likely, scrap them to build modern, modular facilities on the existing brownfield sites. We cannot move forward into an era of self-sufficiency while carrying the dead weight of the past. Sell them, scrap them, or repurpose them, but for the sake of the economy, let us stop pretending they will ever roar back to life under the current model.
Economic Nationalism: Stopping the Export of Jobs
The most poignant aspect of IPMAN’s new stance is the recognition that importation is synonymous with “exporting jobs and importing poverty.” Every liter of fuel we import represents a donation of Nigerian wealth to the economy of the refining country. We pay their workers, we fund their infrastructure, and we subsidize their social security, all while our own graduates roam the streets and our naira loses value.
By committing to domestic refining, we are finally domesticating the value chain. The implications are profound:
- Forex Stabilization: The pressure on the naira will ease significantly as the demand for dollars to import petrol evaporates.
- Job Creation: From the chemical engineers running the plants to the truck drivers and the support services, the multiplier effect of local refining is massive.
- Energy Security: We are no longer at the mercy of geopolitical tensions in the Middle East or supply chain disruptions in Europe. We control our own tap.
The Regulatory Renaissance
We must also acknowledge the role of the government in this transition. The recent leadership changes at the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) and the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) have been critical. The directive from the Presidency is clear: prioritize Nigeria’s interest.
The new leadership must now ensure that this “buy local” mandate is not just rhetoric. We need a regulatory framework that:
- Enforces the domestic crude supply obligation, ensuring that local refineries (both Dangote and future IPMAN refineries) have first right of refusal on Nigerian crude.
- Dismantles the remaining bureaucratic hurdles that make it easier to import than to produce.
- Resolves the outstanding bridging claims owed to marketers (the N190bn figure mentioned by Shettima) to inject liquidity back into the sector, empowering them to invest in this new industrial future.
The Path to Rebuilding is Clear
The decision by IPMAN to embrace the Dangote Refinery and pursue their own refining capacity is a watershed moment in Nigerian economic history. It signals the end of the “cargo economy” and the birth of the “production economy.”
As we look toward January 2026, when the direct supply framework kicks into full gear, the friction that characterized the early days of this transition will fade. The queues will disappear, not because we found a benevolent foreign seller, but because we finally looked inward.
My advice to IPMAN is to stay the course. Do not let the temporary allure of spot-market profits distract from the strategic goal of industrialization. To the new regulators, the mandate is simple: protect this transition. And to the Nigerian people, we are witnessing the correction of a forty-year error. The tanks that were built for importation should indeed be sold or repurposed, for the ship of state has finally turned toward the shores of self-sufficiency. We have left the jungle; let us never return.
Prof. Sarumi, a digital transformation enthusiast, writes from Lagos.