Petroleum Marketers Reap Deregulation Gains as Profits Surge and Borrowings Drop 16.2%

Nigeria’s downstream petroleum sector is experiencing strong financial growth following the removal of fuel subsidies, with major players reporting substantial increases in revenue and profits in the first quarter of 2025. According to industry data, the sector’s top seven companies collectively posted a 66.2% surge in turnover, rising to ₦2.98 trillion in Q1 2025 from ₦1.79 trillion in Q1 2024. Their combined Profit Before Tax (PBT) also grew by 42.1%, reaching ₦334.6 billion from ₦235.5 billion year-on-year.

One notable development is the significant drop in reliance on bank loans. The companies cut their collective borrowings by 16.2% to ₦2.074 trillion in Q1 2025 from ₦2.474 trillion a year earlier. This shift helped reduce finance costs by 36.3%, from ₦838.58 billion to ₦534.14 billion, thereby enhancing their overall profitability. The firms surveyed include Seplat Energy, TotalEnergies, Eterna, MRS Oil, Aradel, Oando, and Conoil. Notably, MRS Oil had no bank borrowings during the review period.

Market analysts credit this improved performance to the deregulation policy that ended Nigeria’s decades-long fuel subsidy regime in Q3 2024. According to David Adonri, Vice President at Highcap Securities Limited, the surge in profits stems from the ability of oil marketers to pass on increased costs to consumers due to the inelastic demand for petroleum products. He also noted that despite high inflation and increased cost of sales, operators achieved strong returns by maximizing capital turnover and reducing borrowing amid elevated lending rates.

Former President of the Chartered Institute of Stockbrokers, Olatunde Amolegbe, emphasized that deregulation has allowed marketers to set pump prices based on their operational costs and margins, leading to greater profitability. He added that reduced reliance on bank financing and the emergence of local supply sources like the Dangote Refinery have improved operators’ FX exposure and product availability.

In his assessment, Ambrose Omordion, Chief Operating Officer of InvestData Consulting, highlighted that increased sales of higher-margin crude products and improved ease of transportation further boosted revenue. However, he cautioned that last year’s steep fuel price hikes have also worsened economic hardships for many Nigerians, even as the sector reaps financial rewards from reform policies.