Energy analysts have said Nigeria may be on the verge of a domestic liquefied petroleum gas (LPG) supply crunch due to Dangote refinery’s systematic price undercutting.

The analysts also warned that the refinery’s undercutting strategy underscores the systemic risk of a monopolistic structure within Nigeria’s downstream sector, which has unprecedented implications for the sector and the economy.

LPG is a mixture of hydrocarbon gases, mainly propane and butane, with some propylene and butylene, that is stored under pressure in a liquid state, making it easy to transport in cylinders or tanks.

According to Energy Industry Analyst, Yemisi Olagunju, the strategy has not only made Dangote the market dominant force, but has also left the market exposed, as previous suppliers are now wary and hesitant to re-enter.

“Prior to the emergence of the Dangote refinery, the primary sources of LPG in the country were domestic gas from the NLNG, supplemented with imports by marketers. However, since January 2025, the Dangote Refinery has systematically undercut and pushed other players out of the market, including the NLNG, by aggressively slashing prices.

“This strategy has made Dangote the dominant and de facto sole supplier of LPG over the last eight months. At present, the refinery is not producing or supplying LPG, and sources are unsure why. The market is now exposed, as previous suppliers remain reluctant to re-enter, wary of being undercut again once Dangote resumes operations,” she emphasised.

Expressing concerns about a potential supply gap, Olagunju said:
“Should importers step in to fill the gap, it would take 2–3 weeks to land the product. This delay could result in a temporary supply gap and price volatility, which is already manifesting.

“While this development provides a troubling preview of what market dominance could look like, especially on PMS, the refinery’s price undercutting strategy underscores the systemic risks of a monopolistic structure within Nigeria’s downstream sector, which has unprecedented implications for the sector and the Nigerian economy.”

Engaging in a telephonic conversation with our correspondent, Chinedu Okoronkwo, the former President of the Independent Petroleum Marketers Association of Nigeria (IPMAN) and the Treasurer of the IPMAN Board of Trustees, remarked that the reduction in gas prices is a welcome advancement, as it leads to a rise in the number of consumers.

Okoronkwo stated that anyone opposed to the reduction of LPG prices in the country is acting out of self-interest. He urged individuals to concentrate on the nation’s broader economic well-being rather than solely considering the business perspective.

He further emphasized that the local market should be encouraged.

“What the Dangote refinery undercutting of LPG portends is this: affordability will bring inflow into gas usage. Many who are into other alternatives will now shift to the use of gas, and this will go a long way in stimulating economic activities positively. Take for example, when gas becomes affordable, the average woman selling akara can immediately shift to using gas rather than firewood.

“Systematic undercutting is a welcome development. Anybody that does not want to appreciate it is selfish. Dangote refinery is producing and Nigeria has abundant gas, and a drastic drop in the price is expected.

“People should not focus on the business angle alone but on the overall economy of the nation. Moving to clean energy and emission control are what we should be looking at.

“Dangote refinery’s existence has helped in reducing pressure on the Naira. Our currency will begin to gain strength because it will solve the problem of importers trying to source dollars. Local markets should be encouraged.”