Nigerians have continued to mount pressure on the Dangote Refinery, the Nigerian National Petroleum Company Limited (NNPC) and fuel marketers to reduce petrol pump prices below N1,000 per litre, raising questions about the current rates of between N1,250–N1,360 despite oil price fall to $72.
This is as the Dangote refinery has purchased two cargoes of UAE crude, capitalising on returning oil supplies from the Middle East Gulf, according to a company source involved in the plant’s operations.
According to S&P, the incoming tankers would be the first sourced by Dangote from any Middle Eastern supplier and will mark a pivot from the African and US grades favoured by the refinery to heavier crude baskets.
However, energy analysts have defended the continuous high pump prices, arguing that the disconnect is not price gouging but a structural lag caused by replacement cost, foreign exchange, and inventory already bought at higher prices.
But across filling stations in the country, consumers are questioning why petrol remains above N1,200 per litre when crude is trading at pre-war levels, while the refinery and marketers were quick to raise prices within hours when prices escalated to as high as $120 per barrel.
“What Nigerian consumers are saying is that the Donald Trump approach applies to Nigeria too. Dangote is not dropping the price of fuel fast enough and people are complaining. The price of crude oil is now below the pre-crisis levels, and yet petrol is still selling at over N1,000 per litre,” one petrol user told THISDAY.
Another consumer pointed out that the same urgency used in raising pump prices should apply now that crude is near pre-war levels.
“For many Nigerians, PMS price at above N1,200 a litre when crude trades for only $73 per barrel is not logical and supportive of current realities. Fuel price should be below N900 by now,” the consumer said.
But reacting to the current debate, energy analysts who spoke to THISDAY said Nigeria’s pricing lag is driven by economics and not defiance.
Managing Partner at The Energy Consulting Practice, Mr. Kelvin Emmanuel, explained that Section 206 of the PIA mandates NMDPRA to operationalise the Transfer Pricing Rule, but that has not been done.
“Transfer pricing rules are important because it is what makes sure that you can translate crude oil to petrol prices. When crude prices are going up, it’s easier to raise petrol prices than it is to bring down petrol prices when there is a fall in crude prices,” he emphasised.
The reason, he said, was that inventory bought earlier was at higher “dated” crude prices.
“The refinery has already bought cargoes at dated prices that are higher than the current market. So, until it exhausts those cargoes… it’s going to be difficult for you to see an immediate price transition. If the refinery immediately drops petrol price by N250 or N300 per litre, it’s going to incur billions of dollars in losses…”, Emmanuel said.
According to him, the price of crude should automatically translate to the recommended retail price but that two things needed to happen: including the regulator enforcing transfer pricing rules and the refiner exhausting the cargo that it purchased at a premium.
Also, Emeritus Professor of Petroleum and Energy Economics, Prof. Wumi Iledare, described the lag as “asymmetric price transmission.”
In a statement, he said increases in costs are usually reflected at the pump much more quickly than decreases. “Price increases tend to move like an elevator, while price reductions often descend like a staircase,” he said. “This is because products in storage were purchased at earlier higher prices, and immediate cuts could create losses and threaten supply stability,” he added.
Iledare said the exchange rate is the most critical variable after international prices.
“Since petroleum products or their production inputs are largely priced in U.S. dollars, any depreciation of the naira can substantially offset the benefits of declining crude oil prices. Consequently, lower crude prices alone do not automatically guarantee proportionate reductions in domestic pump prices.”
He also noted crude and refined product markets were not perfectly synchronised, adding that refining margins, global product demand, seasonal consumption patterns, and supply disruptions could all influence the prices of petrol, diesel, and aviation fuel independently of crude oil prices.
Chief Executive Officer of AHA Consultancies, Mr. Ademola Adigun, said the downward adjustment in refined products will take weeks, not days to happen.
“It takes time for petrol prices to come down as expected… When you bought the products at the old price, you can’t sell it at a lower margin to avoid making a loss,” Adigun stated.
“If they react too rashly and something happens again in the Middle East, what do they do? So, they have to take time and watch the pattern. It will come down, but it won’t happen immediately,” he said.
Emmanuel Addeh and Peter Uzoho
