Petrol prices projected to decrease in Nigeria amid new agreements

 

FILE – A view of oil installations at the Dangote refinery during the opening ceremony in Lagos, Nigeria, May 22, 2023. Nigeria’s Dangote Petroleum Refinery, which is Africa’s biggest, says it has begun production, starting with diesel and aviation fuel.

For decades, Nigeria has relied on imports to meet fuel demand, spending about $15 billion annually. Now, new alliances aim to cut these expenses by investing in homegrown energy, targeting affordable petrol for consumers and boosting the economy.

New agreements among the Nigerian National Petroleum Company Limited, Dangote Refinery and independent oil marketers may end long-standing issues over fuel imports. NNPC and oil marketers will now take petrol directly from local refiner Dangote instead of importing it, aiming to reduce import costs, stabilize petrol prices and make fuel more affordable for consumers.

Energy expert Faith Nwadishi praises this move for its potential to strengthen the economy.

"If we begin to buy products from Dangote, we will be able to save at least 24 trillion naira [$14.3 billion] yearly," said Nwadishi. "Nigeria depends on that. The economy depends on that. If there\’s no fuel, you see the hardship it takes on people. Products cannot come from farms to markets."

Sharing optimism, David Etim, an energy expert and entrepreneur, said he believes this is the right step toward energy independence.

"Energy self-sufficiency or energy dependency is actually a national security issue," said Etim. "It\’s just like food security. No country in the world that depends on outsiders to provide such an essential input to its social life as energy can call itself independent. So, the fact that Nigeria has moved from energy dependency to energy independency is a significant move in a very positive direction."

Nigerians currently pay high fuel prices, with some areas reporting more than 1,200 naira per liter [$0.71]. This deal raises hopes as the oil sector shifts to local production.

Consumers such as Felix Chukwuemeka, an Abuja businessman feeling the heat of rising prices, eagerly await relief.

"From my house to my junction, we paid 300 [$0.18], but now we are paying 600 naira [$0.36]," said Chukwuemeka. "So, you can see the expense is doubled. … It would be very exciting to many of us, especially in the business sector, if the price of petrol seems to reduce, because it will really enhance our business."

Despite optimism, Nigeria\’s four refineries remain nonfunctional, raising sustainability concerns.

Senior economist Paul Alaje emphasizes the need to revamp refineries and stabilize the currency for lasting gains.

"The more you abandon your refinery, it becomes moribund, it becomes sunk cost to the economy. And sadly, this is reality today," said Alaje. "… Nigerians will be looking at a price between 500 to 600 naira per liter of PMS [petroleum motor spirit]. But, do I think this is achievable even under this current agreement? I doubt very much. Why? There is a big elephant in the room. This elephant is called the exchange rate."

While the new alliances in the oil sector signal a positive step toward stable, affordable fuel, experts stress the need for transparency, accountability and strict implementation to ensure that Nigerians benefit.

For now, there\’s been no notable impact on the cost of PMS across the country.

However, if successful, these agreements could mark a major shift for Nigeria\’s oil industry — securing energy independence, easing prices and boosting economic growth.

 

By：VOA