Nigeria’s Petrol Prices Drop as Dangote Refinery Sparks Competition

The retail petrol price in Nigeria has fallen to 860 naira per litre, driven by recent cuts from the Dangote Refinery. The Nigerian National Petroleum Corporation Limited also reduced prices following these changes. This shift comes after a period of soaring prices post-subsidy removal, aiming to alleviate financial burdens during Ramadan and improve market competition.

Recent developments in Nigeria’s petrol market have led to a significant reduction in retail prices, which now stand at 860 naira per litre. This decline can be attributed to the Dangote Refinery, which has made two price cuts in February, lowering costs from a peak of 1,030 naira. Additionally, the Nigerian National Petroleum Corporation Limited (NNPC), another major supplier, has also announced price reductions in response to the refinery’s actions.

Historically, Nigeria has relied on imported gasoline due to the decline of its state-owned refineries. Following the removal of fuel subsidies by President Bola Tinubu, petrol prices surged, with costs rising from about 195 naira per litre in May 2023 to as high as 1,300 naira in some areas. This escalation has contributed to a broader cost-of-living crisis in the nation.

The Dangote Refinery, which began operating in September 2024, aims to lessen Nigeria’s dependence on petrol imports. Aliko Dangote, the refinery’s owner, stated that the price reductions are intended to alleviate financial pressures for Nigerians during Ramadan. Ademola Adigun of AHA Strategies commented that the price cuts might help the Dangote Refinery establish a dominant market position.

Despite concerns regarding potential monopolistic practices, Dangote has refuted such allegations. Consultant Ikemesit Effiong noted that the observed price adjustments may be influenced by more stable currency conditions and declining crude oil prices. Clement Isong, representing the Major Energies Marketers Association of Nigeria, affirmed that the price revisions indicate the functioning of a deregulated market, which benefits competition among suppliers who buy fuel from Dangote’s refinery.

In summary, the recent price drop of petrol in Nigeria, driven by competition initiated by the Dangote Refinery, marks a significant shift in the market dynamics. While the country traditionally depended on imports, the refinery’s new operations are aimed at reducing this reliance. Economic factors, including currency stability and lower crude prices, further support the decrease in petrol costs. The market’s response implies a move towards wider deregulation and competitive pricing in Nigeria’s petroleum sector.

Original Source: www.hindustantimes.com