By Abiodun Alade
If there’s one burning question on the minds of Nigerians these days, it’s this: why are we paying between N1,000 and N1,500 for a litre of Premium Motor Spirit (PMS)?
Unfortunately, the very people who should be explaining this strange new reality have chosen to stay tight-lipped, with their heads buried in the sand like ostriches. Meanwhile, those who have been milking the country's oil wealth while keeping its four refineries comatose have been busy peddling dubious narratives to discredit the Dangote Petroleum Refinery.
It seems some people would rather pull the wool over our eyes than allow us to see the real picture.
Let’s be clear: the Dangote Refinery is not to blame for the high price of PMS in Nigeria. In fact, without this refinery, we might be staring at petrol prices as high as N2,500 per litre, as oil marketers and analysts have recently predicted.
The real culprits behind the price mess are the oil cabals and their cosy friends at the Nigerian National Petroleum Corporation Limited (NNPCL).
These folks are pushing the narrative that locally refined products are somehow more expensive than imported fuel, which, in their view, justifies the ongoing importation of fuel. But let’s pause and ask: since when did importing fuel become a better deal than refining it locally? That’s like paying extra for a loaf of bread because it was baked in an oven miles away.
As with all global refineries, the Dangote Petroleum Refinery doesn’t set pump prices for petroleum products.
Those decisions, much to the refinery’s critics’ chagrin, are based on market dynamics, government policies, and the influence of some powerful individuals.
The real reason for the recent hike in petrol prices is a simple equation: subsidy removal plus the floating of the Naira.
In August, reports showed that the NNPCL was selling petrol at half the actual cost of imported fuel. Officially, the pump price was N568 per litre, but the true landing cost was a staggering N1,100 per litre.
So, the NNPC was “subsidising” fuel imports by almost N600 per litre—until the scheme became too expensive to sustain. Naturally, prices were hiked to N855 per litre.
Here’s the kicker: in 2023, the Federal Government racked up an eye-watering N5.1 trillion in under-recovery and energy security expenses on fuel imports.
Guess where that money came from? The same pockets that should have funded healthcare, education, and infrastructure. Instead, we were left with an empty wallet and a bill that was too big to ignore.
Meanwhile, on the other side of the world, Guyana, the third-smallest sovereign state, is handing out $100,000 cash grants to its adult citizens as part of its oil boom, while Nigeria—the most populous Black nation on Earth—is amassing foreign debt to pay for fuel subsidies.
If the pricing template used to offset imported petrol costs was applied to products from the Dangote Refinery, petrol prices could be much lower than they are today—possibly as low as N500 per litre.
However, the government has decided not to restore subsidies. After all, what was once intended as relief for the people has now turned into an opportunity for siphoning.
According to a report by The Guardian in October, oil marketers are making an extra 48% profit by smuggling petrol out of Nigeria to neighbouring countries, where prices are far higher.
In Mali, petrol costs N2,266 per litre; in Côte d'Ivoire, it’s N2,289; in Cameroon, N2,196; and in Benin Republic, N1,779.
No wonder daily PMS consumption in Nigeria keeps rising. And if the oil cabals get their way, we’ll be looking at 103 million litres per day, just like in 2022.
The government, understandably, is trying to keep local prices aligned with those in neighbouring countries to curb smuggling.
But honestly, until the greedy cabals are shown the red card, and we declare that “business as usual” is over, the government’s strategy is doomed to fail.
While President Bola Ahmed Tinubu’s Naira-for-Crude initiative is certainly a step in the right direction, the floating of the Naira is keeping petrol prices high.
Why? Crude oil is priced in dollars, so domestic refiners, including the Dangote Refinery, are still paying the same dollar amount for crude, now in Naira. When converted, it’s expensive: $90 per barrel now translates to over N150,000.
Currently, a litre of Nigerian crude costs between N890 and N910, before factoring in refining and logistics costs.
So, what’s the magic number? How much can a refinery—domestic or foreign—realistically sell a litre of refined petrol for? That’s the million-naira question.
With the Naira-for-Crude policy, the expectation is that the Naira will stabilise over time.
If that happens, petrol prices should eventually fall. Imagine if the Naira strengthens to N1,000 to the dollar—the price of petrol could drop significantly.
That’s what every genuine, patriotic Nigerian should be rooting for, rather than chasing after dollars that only put more pressure on the Naira.
The Minister of Finance and Coordinating Minister of the Economy, Wale Edun, recently stated that the government would earn about N700 billion monthly from the sale of crude in Naira and from subsidy removal policies, compared to the $600 million it was previously spending on fuel imports.
So, let’s do the math: one option helps the people; the other helps the oil cartels. No prizes for guessing which one benefits Nigeria in the long run.
Of course, the oil cabals won’t see the benefits because it takes away their free access to wealth, allowing them to live their best lives.
Isn’t it ironic that these same marketers who were lamenting high petrol prices due to a lack of local refining capacity are now saying it’s cheaper to import fuel than to refine it here?
Where were they when the government was spending trillions on refinery maintenance? Suddenly, the landing cost of imports, once as high as N1,400 per litre, has magically dropped to under N1,000. How convenient!
The cartels have been blending off-spec fuel while collecting subsidies for “premium” products.
Or perhaps they’ve been stealing crude and blending it abroad; after all, crude theft in Nigeria is a well-known business, especially when done with large vessels under the radar.
Already, Nigerians are seeing the benefits of the Dangote Petroleum Refinery, which has reduced the prices of other petroleum products like diesel and aviation fuel by over 45% and 35%, respectively.
Naturally, this earned Dangote criticism from the oil cabals, who promptly complained to President Tinubu, claiming that this “patriotic man” was ruining their business by alleviating public suffering.
Who knew that doing good for the public could be so controversial?
Nonetheless, we’re confident that similar reductions in PMS prices will follow once local refining capacity is fully embraced, and stakeholders start putting Nigeria’s interests above their own.
If it works for diesel and aviation fuel, surely it’s not too much to ask that petrol prices follow suit—unless the oil cartels have a different agenda.
The Dangote Petroleum Refinery has chosen to rise above the noise, urging all stakeholders to prioritise the nation’s progress and the welfare of its people.
Sadly, some prefer to spread falsehoods about a private investment aimed at propelling Nigeria toward economic self-sufficiency.
For the sceptics, I’ll say this: the Aliko Dangote I know is not the type to bow to propaganda, hate, or lies—especially when it’s all in defence of Nigeria’s national interest and Africa’s development.
•Abiodun writes from Lagos•
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