Pricing of petroleum products could change in Nigeria as the country is considering allowing billionaire Aliko Dangote’s refinery to set the price of the gasoline it sells, sources familiar with the matter told Bloomberg. This move is poised to reshape the government’s control over what consumers pay for fuel in Africa’s largest oil producer.
Until now, Nigeria has imported all of its gasoline and heavily subsidized the price, at great cost to the country. However, Dangote’s massive refinery near Lagos is set to change that, as it begins to locally refine gasoline. The Dangote Refinery is expected to start selling gasoline directly to petroleum marketers next month, and for the first time, will have the freedom to set its own prices.
The state-owned Nigerian National Petroleum Corporation (NNPC), which has been the sole importer of gasoline, has been selling the product below market rates since August 2023. This was done to curb rising inflation and ease public unrest after the removal of fuel subsidies. Recently, NNPC raised the gasoline price by 45%, bringing it closer to market levels at 897 naira ($0.56) per liter.
Government spokesman Temitope Ajayi confirmed the shift in pricing control, stating that Dangote Refinery will not sell its products below market value. “Dangote Refinery was set up as a profit-making business, so I don’t see how NNPC or the federal government will control pricing for a private enterprise,” Ajayi said. However, he assured the public that the petroleum industry regulator would ensure that product quality is maintained and that prices remain fair, preventing the business from taking undue advantage of citizens.
The changes come at a time when Nigeria is grappling with gasoline shortages, partly caused by debts NNPC incurred due to the subsidy program. NNPC reported being owed 7.8 trillion naira ($4.9 billion) in subsidy debts for the period leading up to July. This debt has disrupted the corporation’s ability to consistently supply gasoline.
In the future, petrol marketers will be able to buy products directly from the Dangote Refinery. A spokesperson from Dangote Industries did not immediately respond to requests for comment. NNPC spokesman Olufemi Soneye stated, “The market has been deregulated, meaning petrol prices are now determined by market forces rather than by the government or NNPC.”
At full capacity, the Dangote Refinery is expected to produce around 330,000 barrels of gasoline per day, according to Randy Hurburun, a senior refinery analyst at Energy Aspects Ltd. This volume exceeds 1% of global demand for gasoline, which stands at approximately 27 million barrels a day, and is sufficient to meet the entire fuel demand of the United Kingdom.
This major policy shift signals a new era for Nigeria’s energy sector as it transitions away from reliance on subsidized fuel imports towards self-sufficiency in gasoline production, with private entities like Dangote now playing a pivotal role in setting prices.
