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Prof. Wumi Iledare, an expert in the petroleum industry, has addressed concerns from petrol marketers about escalating petrol prices. He stated that these developments reveal enduring structural deficiencies in Nigeria’s downstream sector, rather than indicating a failure of deregulation.

Iledare, who holds the title of professor emeritus and serves as the main facilitator at the Energy Business School of the Federal University of Petroleum Resources, revealed this in a statement to ZINGTIE on Monday.

This arises after petroleum marketers recently voiced their exasperation regarding the price and affordability of petrol, in light of the recent increases in gantry prices imposed by the Dangote Refinery and ex-depot hikes.

In his response, Prof. Iledare stated that the financial burden currently faced by marketers is a result of years spent functioning under a subsidy regime that obscured actual market risks.

Iledare clarified that the process of deregulation only revealed vulnerabilities that were already present in the sector.

“The current financing strain among petrol marketers should not be read as evidence that deregulation has failed; it is evidence that the downstream sector entered a liberalized market structurally undercapitalized.

“For years, the subsidy regime insulated marketers from true market risk. Returns were effectively policy-backed, working capital cycles were cushioned by government payment expectations, and operational discipline around balance sheet strength was secondary. Deregulation did not create fragility— it revealed it.

“What we are seeing now is a classic transition shock. A sector that operated in a quasi-administered market is suddenly exposed to commodity price volatility, exchange rate risk, and commercial credit discipline.

“In such an environment, thin capitalization becomes a binding constraint. Marketers that thrived under subsidy-era cash flows are now competing in a capital-intensive trading market that requires strong liquidity buffers, access to trade finance, and professional risk management. Many were simply not prepared.

“This is not about blame; it is about industrial restructuring. Liberalized markets reward scale, capitalization, and financial sophistication. Some consolidation in the downstream sector is economically inevitable.

“The policy question is not whether to retreat from deregulation, but how to support a transition toward a more resilient market structure: stronger capitalization standards, better access to structured trade finance, credible FX frameworks, and regulatory predictability. A market built on weak balance sheets will always be vulnerable to price shocks.”

In recent days, petrol marketers have expressed their concerns about the high cost of petrol, attributing it to rising ex-depot prices from the Dangote Refinery. This situation has heightened worries about pump prices and profitability throughout the downstream value chain.

Iledare, however, emphasized that policymakers should concentrate on bolstering market institutions and financial capacity instead of reversing deregulation. He stressed the importance of strong balance sheets and predictable regulatory frameworks for building a sustainable downstream sector.

Last week, the owners of Dangote Refinery and depots in Nigeria significantly increased the petrol gantry price, leading to a surge in retail fuel prices across the country, with prices in Abuja ranging from N839 to N900 per liter.

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