Why petrol is still above N1,000: Dangote, importers battle for market control

Motorists hoping for a sharp reduction in petrol prices may have to wait longer, as industry insiders say pump prices are unlikely to drop below N1,000 per litre in the near term unless fuel importers trigger aggressive competition with the Dangote Petroleum Refinery. The expectation of cheaper petrol followed the recent decline in global crude oil prices to around $70 per barrel after oil shipments through the Strait of Hormuz gradually resumed.

Dangote refinery cites high-cost crude inventory

A senior official of the Dangote Group, speaking exclusively to The PUNCH, maintained that the Federal Government should direct licensed fuel importers to reduce their own prices rather than expecting the refinery to shoulder the burden alone. According to the official, the refinery still holds substantial inventories of crude oil purchased when international prices were significantly higher. He explained that the company also has crude cargoes currently in transit to Nigeria as well as forward purchase agreements that were concluded before the recent drop in global oil prices. The source said these factors mean the refinery's production costs are still tied to more expensive crude, making an immediate and substantial reduction in petrol prices commercially difficult.

Government warns against profiteering as marketers push back

The continued high cost of petrol has drawn the attention of the Federal Government. The Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, recently cautioned that the government would not tolerate profiteering or any practices designed to exploit Nigerians through excessive fuel pricing. His warning came amid growing public dissatisfaction over the disconnect between falling global crude oil prices and the relatively high pump prices. However, fuel marketers have pushed back, insisting that any attempt by authorities to impose price controls would be unsustainable, adding that many filling stations would be compelled to suspend petrol sales if such measures were introduced.

What this means for the naira and Nigerian consumers

Since late 2024, the Dangote Petroleum Refinery has emerged as Nigeria's dominant fuel price setter, replacing the Nigerian National Petroleum Company Limited (NNPCL), which previously held that position when it was the country's primary petrol importer due to non-functional local refineries. For now, industry observers believe Nigerians are unlikely to see petrol prices fall below the N1,000-per-litre mark unless increased competition among importers or a prolonged decline in crude oil prices significantly reduces the overall cost of supplying fuel to the domestic market. The development highlights the continuing debate over fuel pricing in Nigeria's deregulated downstream petroleum sector, where operators insist that prices are determined by prevailing market conditions, exchange rates, product acquisition costs, transportation expenses, and other operational factors.