Lagos (AFP) – The retail price of petrol in Nigeria has dropped to 860 naira ($0.57) per litre, as a major local refinery drives down prices in a country long forced to import its gasoline. The 650,000 barrel-per-day capacity Dangote Refinery cut depot prices twice in February, helping knock down costs from a five-month high of 1,030 naira. The Nigerian National Petroleum Corporation Limited (NNPC), which is also a major retailer and supplier to petrol stations, responded in kind days later, announcing it was dropping prices on Tuesday.
Despite being a major oil producer, Nigeria’s state-owned refineries have long been run-down, leading the country to rely heavily on imported petrol. Fuel prices increased fivefold after President Bola Tinubu removed subsidies that kept prices low for decades. A litre of petrol sold for around 195 naira just before Tinubu took office in May 2023. The price rose to at least 998 naira per litre in Lagos and 1,030 naira in the capital, Abuja, at the beginning of October 2024. It sold for as much as 1,300 naira elsewhere, as economic reforms saw the Nigerian currency drop in value while the removal of the subsidy sparked price hikes. The high price of fuel was a major concern in the west African nation, still gripped by a larger cost-of-living crisis.
The Dangote Refinery began production in September 2024, in an ambitious project to wean Nigeria off imported petrol. The refinery, owned and named after Africa’s richest man, Aliko Dangote, said in a statement last week that the reduced price was “designed to provide essential relief to Nigerians” during Ramadan.
Increased competition has also played a role in the price adjustments. Ademola Adigun, managing director of AHA Strategies Ltd, a consulting firm based in Abuja, said the price slash was a way for the Dangote Refinery to attain market dominance. “Nigerians can expect this trend to continue until Dangote Refinery achieves market dominance and other marketers can no longer compete,” Adigun told AFP. Dangote has denied accusations of using his refinery’s capacity and market share to seek a monopoly.
Ikemesit Effiong, partner at Lagos-based consultancy firm SBM Intelligence, noted that the adjustments could also be attributed to a stable currency and lower crude prices. “The pump price would have increased if the naira lost value against the dollar or crude oil got more expensive,” he said.
Clement Isong, the president of the Major Energies Marketers Association of Nigeria (MEMAN), commented that the price adjustment was a sign of a deregulated market. The association consists of six retailers, including NNPC Retail, MRS, Conoil, Ardova, Total, and Mobil (11 Plc), accounting for more than 40 percent of Nigeria’s retail petroleum market. “Competition is working and the new price of petrol is in line with current import parity prices. MEMAN members also buy a bulk of their products from the Dangote refinery,” he told AFP.
© 2024 AFP
