How competition, importation can stimulate downstream sector

As the downstream oil and gas sector continues to face challenges of underperformance, infrastructure deficits, and low investment, industry experts and marketers are pointing to healthy competition and regulated importation of petroleum products as potential game changers for its revival.

The downstream sector, which involves refining, distribution, and marketing of petroleum products, has for years struggled under monopolistic practices, regulatory inefficiencies, and

inconsistent policies.

However, with the partial removal of fuel subsidies and the liberalisation of pricing, industry stakeholders see a new window for reforms and renewed investor interest.

Energy experts believe that a competitive and transparent environment will not only stabilise supply but also drive down costs and improve service quality.

Experts caution that no single facility can meet the nation’s entire demand.

Importation, they say, remains a crucial complement, at least in the medium term, to ensure energy security and supply consistency.

Mr Bamidele Johnson, a petroleum engineer and analyst, said that deregulation, when effectively implemented, would boost efficiency.

“If multiple players are allowed to import and operate fairly, prices will stabilise, and consumers will benefit from better product availability and service,” he noted.

Johnson added that an open market would encourage investment in storage, transportation, and retail infrastructure.

He stressed the need for fair access to foreign exchange, port facilities, and distribution networks, which have long been monopolised by a few dominant players.

The Independent Petroleum Marketers Association of Nigeria (IPMAN) echoed this position.

Chinedu Ukadike, the association’s National Public Relations Officer, emphasised that encouraging competition through product importation would help resolve persistent pricing challenges and boost local refining.

“Competition makes the sector more responsive and consumer-focused,” he said.

Dr Ayodele Oni, an energy lawyer and downstream analyst, stressed that trust in regulatory institutions is key to attracting serious investors.

“The market needs clarity, consistency, and strong enforcement of standards. Without that, no one will put their money into the sector,” he warned.

Some marketers also call for policies that support local businesses, warning that a poorly regulated liberal market could expose indigenous operators to unfair competition.

“There must be transitional support mechanisms to ensure local players are not edged out by bigger foreign interests,” the marketers said.

Dr Taiwo Ogunleye, Legal Advisor for International Law at the Organisation of the Petroleum Exporting Countries (OPEC), said that competition and importation are essential to stimulating Nigeria’s energy market.

He explained that these practices align with the goals of the Petroleum Industry Act (PIA), which seeks to create a level playing field.

Ogunleye warned that monopolies in the downstream and midstream sectors could pose serious risks to energy security.

“Monopoly limits customer choice, reduces service quality, and opens doors for harmful pricing practices. It also discourages innovation and investment,” he said.

He further explained that a truly competitive market exists when multiple players can enter, compete, and operate under fair and transparent conditions.

He said that these include open access to infrastructure, market-driven pricing, minimal regulatory obstruction, and strong enforcement of anti-competitive rules.

“Anti-competitive behaviours like price fixing, collusion, and refusal to supply not only distort the market but harm consumers, block innovation, and hurt small businesses trying to enter the space,” Ogunleye warned.

He called for strict oversight to curb such practices and promote a healthy business environment.

Mr Israel Aye, Non-Executive Director at Aspen Energy, said the benefits of competition for consumers include fairer fuel prices, improved service delivery, and increased transparency.

He emphasised that a competitive environment also incentivises modular refining and attracts new entrants to the sector.

“Where competition is limited, markets tend to suffer from inflated prices, poor service delivery, and underinvestment.

“For a developing economy like Nigeria, regulatory institutions must remain active and transparent to attract global investors and ensure market sustainability,” Aye said.

He stressed that the full implementation of the Petroleum Industry Act and consistent application of competitive policies would provide the long-term framework the sector needs to thrive.

He added that if competition is embraced and importation properly managed with transparent policies and fair market access, Nigeria’s downstream sector could experience a long-overdue transformation, one that brings jobs, investment, stability, and greater consumer value.