Fuel prices in Nigeria may not drop below N1,000 per litre any time soon unless importers decide to initiate a price war against the Dangote Petroleum Refinery, The PUNCH reports.
As crude prices crashed to about $70 per barrel following the gradual return of oil supply through the Strait of Hormuz, many Nigerians expected fuel prices to fall to levels recorded before the US-Iran war began on February 28.
However, prices have remained high, with only marginal reductions by the Dangote refinery, the country’s major supplier of petrol, diesel, and aviation fuel.
Since the fourth quarter of 2024, the Dangote refinery has been Nigeria’s price setter, taking over from the Nigerian National Petroleum Company Limited, which previously played that role when it was virtually the country’s sole petrol importer due to the absence of functioning refineries.
As calls intensify for lower fuel prices following the drop in global crude oil prices, many Nigerians are looking to the Dangote refinery. However, the refinery appears to be looking elsewhere.
In an exclusive interview with our correspondent, a senior official of the Dangote Group said the Federal Government should instead ask the importers it granted licences to reduce their prices.
The official, who requested anonymity because of the sensitivity of the matter, said he was surprised that importers bringing in cheaper Russian petrol had not reduced pump prices.
The Federal Government has been giving huge quantities of import licences for the past few months. And the importers bring cheaper Russian products (cheaper because they are banned commodities). So, why are the importers not selling cheaper?” the source asked.
When told that importers might be waiting for the Dangote refinery to take the lead, he queried the assumption, saying, “How can they be waiting for us when their vessels are arriving every day?”
The source also disclosed that the refinery still holds significant volumes of crude purchased at higher prices, making an immediate crash in fuel prices difficult. He revealed that the refinery has massive crude storage capacity, while additional crude cargoes are still en route to Nigeria and others are under forward purchase agreements.
“We have huge crude oil storage capacity in our crude tank farm. Further, there would be crude oil in the ships, at different points, sailing from the country of origin to Nigeria. In addition, there would be crude oil under forward purchases, which have yet to be shipped. But, since the country trusts importers, let them go and sell at the low imported price plus profit,” he said.
The Dangote official also stated that the government was not supplying the refinery with sufficient crude, forcing it to rely on imported crude while exporting refined products. “The government is giving us small quantities of crude oil. So, we import our crude oil and export our products. If you say the masses will be at the receiving end, you should know that it’s a sad situation for the investor too,” he submitted.
Data from the Major Energies Marketers Association of Nigeria, a body with major fuel importers as members, showed on Wednesday that the landed cost of imported petrol was N1,023 per litre, while Dangote’s gantry price stood at N1,075.
Despite the lower landing cost of imported petroleum products, the reductions have yet to adequately reflect at filling stations.