Despite the availability of local refineries, petrol remains unaffordable for ordinary Nigerians, spiking inflation and deepening economic hardship. Over the years, Nigerians were led to believe that refining crude oil locally would result in cheaper petroleum products, especially petrol. However, this has not been the case, and the situation has worsened since the government ended fuel subsidies in 2023.
In 2012, former President Goodluck Jonathan faced widespread opposition when he attempted to remove petrol subsidies, leading to violent protests under the banner of ‘Occupy Nigeria.’ Protesters argued that locally refined petrol would be cheaper, so removing the subsidy would not increase prices. While Jonathan reduced the petrol price to N97 per litre, he failed to revamp the nation’s refineries in response to the protests.
When Muhammadu Buhari assumed office in 2015, he promised to fix the refineries before removing the fuel subsidy. However, under his leadership, petrol prices soared close to N200 per litre, and the refineries remained dysfunctional. Buhari secured a $1.5 billion loan to rehabilitate the Port Harcourt refinery, but it was not ready by the time he left office. In 2023, President Bola Tinubu wasted no time removing fuel subsidies, triggering an immediate surge in petrol prices. The price of petrol quickly surpassed N500 per litre at many filling stations, including those operated by the Nigerian National Petroleum Company Limited (NNPC). Despite assurances from the president that the country would benefit in the long run, many Nigerians were left struggling with higher transport fares and skyrocketing prices for essential goods.
The high cost of petrol has profound implications for Nigeria’s daily life. Over 85 million Nigerians have no access to electricity, making petrol essential for powering generators and other appliances. In rural areas, the cost of petrol has further limited access to electricity. According to Power Minister Adebayo Adelabu, generating 1 kilowatt-hour of electricity now costs N750 due to the high price of petrol.
The public transport sector has also been hit hard. Commercial drivers have raised fares in response to the rising fuel costs, causing additional strain on families already grappling with inflation. The cost of goods in markets has also spiked, deepening the nation’s economic crisis.
Two weeks after Tinubu’s inauguration, the naira was floated, further driving up fuel prices following the devaluation of the currency. In response, the NNPC introduced a subsidy payment through the back door, keeping the pump price at N600 per litre despite a landing cost of around N1,200. However, the NNPC soon acknowledged significant debt to fuel suppliers, forcing it to increase the pump price to N855 per litre in September 2024. By October, the price had risen to N1,100 per litre, exacerbating the already dire situation for Nigerians.
Earlier this year, local refineries, including the Dangote refinery, were touted as key solutions to reduce petrol prices. The Publicity Secretary of the Crude Oil Refinery Owners Association of Nigeria (CORAN), Eche Idoko, had stated that petrol could drop to N300 per litre if local refineries processed the product in large volumes. He criticized the reliance on imported refined products, suggesting that local refining could lower prices significantly.
However, the Dangote refinery faced challenges in sourcing sufficient crude oil. Aliko Dangote and his company accused international oil companies (IOCs) of refusing to sell crude to the refinery, hindering its ability to produce cheaper petrol. The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) was also criticized for not enforcing the domestic crude supply obligation, allowing IOCs to sell crude at a premium. In response to these challenges, the federal government intervened in July, approving the sale of crude to Dangote in naira, hoping to reduce the price of petrol. However, the promised exchange rate fix for the naira-for-crude deal was never implemented, meaning Dangote continued to purchase crude at international prices, albeit in naira.
By September 2024, the Dangote refinery had started producing petrol, and the NNPC’s Port Harcourt refinery also resumed crude processing in November. However, these efforts have not brought the anticipated price reductions. Currently, Nigeria’s petrol prices remain among the highest in Africa. According to GlobalPetrolPrices.com, as of December 2024, Nigeria’s petrol price stood at $0.768 per litre, far above other major African oil producers like Libya, Angola, and Egypt, whose prices range from $0.031 to $0.335 per litre.
The situation has prompted criticism from many Nigerians, who feel the removal of subsidies has only worsened their plight. Senior officials from the Nigeria Labour Congress (NLC), such as Chris Onyeka, have condemned the high petrol prices, arguing that they do not reflect the cost of locally refined products. Onyeka pointed out that the price mechanism still includes costs associated with imported products, even though Nigeria produces its own crude oil and refined products.
“Why should Nigerians be paying such high prices for petrol when we have refineries in the country?” Onyeka asked. “The government is just shifting the burden onto the people.”
Meanwhile, the Chairman of the Centre for Accountability and Open Leadership (CAOL), Debo Adeniran, also criticized the current pricing, stating that a price of N935 per litre is still too high. Adeniran suggested that Nigeria could follow the example of oil-rich countries like Libya, which once provided petrol for free under former leader Muammar Gaddafi.
CORAN’s Eche Idoko, however, defended the price reduction as a step in the right direction. He stated that prices would likely continue to fall if crude prices remain stable and the naira strengthens against the dollar.
Experts like Professor Dayo Ayoade of the University of Lagos remain optimistic but caution that more competition is needed to bring down prices. According to Ayoade, the Dangote refinery is the only one currently operating optimally, while others like the Port Harcourt refinery are still not fully functional. He emphasized that more refineries would be needed to reduce prices through competition. He also pointed to the underutilization of the Warri and Kaduna refineries, which should be brought back online to increase production and drive down costs.
As for President Tinubu, while he has stood by his decision to remove the fuel subsidy, he has suggested that adopting compressed natural gas (CNG) could offer Nigerians cheaper and cleaner fuel alternatives. However, the cost of converting vehicles to CNG and the lack of refueling stations have posed significant barriers to widespread adoption.
In a bid to address some of these issues, local refiners have urged the federal government to peg the dollar at N1,000 for oil sector transactions, especially for the naira-for-crude sales. This move, they argue, would help stabilize prices and ensure energy security for the country.
For now, it appears that Nigerians will continue to face high petrol prices unless more drastic measures are taken to improve local refining capacity and stabilize the country’s economic conditions.
