The Dangote Refinery’s Price Hike and its Implications for Nigeria’s Fuel Market
Nigeria’s fuel market is bracing for another wave of price increases following the Dangote Petroleum Refinery’s decision to raise its ex-depot price for Premium Motor Spirit (PMS), commonly known as petrol, to N880 per litre. This represents a N55 increase from the previous rate of N825 and is expected to push pump prices above N900 per litre in some parts of the country, particularly in areas far from distribution hubs. The hike has raised serious concerns about fuel affordability and price volatility in the downstream sector, especially given the declining global crude oil prices.
The refinery’s decision comes despite Brent crude dipping to $76.47, WTI falling to $74.93, and Murban dropping to $76.97. This decline in global benchmarks offers little respite to Nigerian consumers due to the refinery’s increasing reliance on imported U.S. crude and escalating operational costs, exacerbated by the instability of the Nigerian Naira against the US dollar. These factors contribute significantly to the upward pressure on fuel prices, seemingly decoupling them from the international crude oil market trends.
Dangote Group President, Aliko Dangote, recently revealed the refinery’s growing dependence on the United States for crude oil supplies. Projections indicate the refinery will import approximately 17.65 million barrels between April and July 2025, including the 3.65 million barrels already received in the past two months. This reliance on imports comes despite the Federal Government’s naira-for-crude policy, which was designed to ease foreign exchange pressures. Dangote explained that the refinery continues to face crude shortages, necessitating the shift towards U.S. imports.
This situation fuels accusations of exploitation by oil marketers, with the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) President, Festus Osifo, arguing that the current pump price should be between N700 and N750 per litre, given the prevailing global crude oil prices. Osifo criticizes the disparity between the falling global prices and the stagnant or increasing retail prices in Nigeria, asserting that consumers should benefit from lower prices when global crude costs decline. His earlier prediction of impending price hikes now appears prescient in light of the refinery’s move.
The ripple effects of Dangote’s price increase are already being felt across the fuel distribution chain. Depot owners and fuel distributors in Lagos and other major cities anticipate a domino effect, with new price bands expected to mirror the refinery’s lead. Many had delayed pricing decisions since the refinery temporarily halted sales and withheld fresh Pro Forma Invoices (PFIs) earlier in the week. This delay fueled speculation and allowed for opportunistic price hikes at various depots, further exacerbating the price instability in the market.
The current scenario highlights the complex interplay of factors influencing fuel prices in Nigeria. While the global crude oil market shows a downward trend, local dynamics, including the refinery’s import dependence, operational costs, and currency fluctuations, exert significant upward pressure on prices. This disconnect between global trends and local realities underscores the vulnerability of the Nigerian fuel market and the pressing need for sustainable solutions to ensure price stability and affordability for consumers. The situation also raises concerns about the efficacy of the naira-for-crude initiative in ensuring consistent crude supply to the Dangote Refinery and mitigating the impact of external market fluctuations. As the government continues to grapple with these challenges, the burden of high fuel prices continues to fall heavily on Nigerian consumers.
