What Nigerians May Pay for Petrol as NNPC Scales Back Role in Dangote Refinery Deal

Nigerians could soon face a significant hike in petrol prices as the Nigerian National Petroleum Company Limited (NNPC) steps down from its exclusive agreement with Dangote Refinery. This shift could push the price of petrol in Lagos to N991.21 per litre, N1,040.31 in Kano, and N1,007.35 in Calabar, with prices varying based on exchange rates and crude oil prices.

The NNPC’s decision to quit its role as the sole off-taker of petrol from Dangote Refinery opens the door for independent marketers to purchase fuel directly from the refinery. This is expected to cause a rise in petrol prices across the country as the subsidy arrangements that previously kept prices lower are phased out.

A recent report by the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) highlights the anticipated petrol price increases. In Abuja, the capital, petrol could rise to N1,029.01 per litre. In other key cities, like Sokoto and Maiduguri, prices could exceed N1,045 per litre. These changes are based on a pricing framework that considered the average foreign exchange (FX) rate of N1,604.89 per USD and trading data from late September to early October 2024.

This price hike comes after the House of Representatives called for independent marketers to have direct access to purchase fuel from the refinery, arguing that competition is essential to drive down prices and ensure supply stability. The decision to open the market is expected to end the NNPC’s monopoly over petrol purchases from Dangote Refinery.

Despite the looming increase, neither the NNPC nor Dangote Group has made official statements on the situation. As of Tuesday morning, key officials, including NNPC’s Chief Corporate Communications Officer, Olufemi Soneye, and Dangote Group’s Anthony Chiejina, had not provided comments.

This development follows the NNPC’s recent purchase of petrol from Dangote Refinery at N898.78 per litre, while it sold to marketers at N765.99 per litre—effectively subsidizing the product at a loss of around N133 per litre. However, with the NNPC stepping back, the subsidy burden will likely disappear, leaving Nigerians to bear the full cost of petrol.