Despite the commencement of domestic refining, petrol prices in Nigeria may remain elevated, as global market dynamics continue to exert significant influence on local fuel costs, the management of the Dangote Refinery has said.
Speaking during an interview on Arise Television, the Managing Director of the refinery, David Bird, explained that the expected price relief from local refining is being constrained by external economic and geopolitical factors, particularly ongoing tensions in the Middle East, a major hub for global crude oil supply.
According to Bird, the refinery operates within a fully deregulated environment and is therefore exposed to fluctuations in international market conditions.
“On fuel pricing, the refinery is fully exposed to global market forces and operates without subsidies, making it vulnerable to fluctuations driven by geopolitical tensions,” he said.
He noted that the cost of key inputs — including crude oil, freight, and insurance — are all tied to global benchmarks, making it difficult to significantly reduce pump prices.
A market survey conducted across Nigeria indicates that recent declines in global crude oil prices have yet to reflect in domestic petrol prices. Retail prices remain elevated, with petrol selling at an average of about N1,300 per litre nationwide, following a nearly 20 per cent increase recorded last week.
Bird acknowledged the growing burden on Nigerians, describing the situation as part of a wider cost-of-living crisis.
“This is a cost-of-living crisis; every facet of the modern economy is impacted by energy,” he stated.
He added that even if geopolitical conflicts were resolved immediately, disruptions in global supply chains would persist for several months, continuing to affect fuel pricing.
The refinery boss also called on the Federal Government to adopt a broader approach to addressing the issue, beyond just crude oil pricing. He stressed the need to tackle structural challenges such as the high cost of doing business and regulatory bottlenecks within Nigeria’s petroleum sector.
“There’s an opportunity for the government to take an all-encompassing view—not just crude price, but the cost of doing business in Nigeria,” Bird said.
He further emphasized the importance of long-term energy planning, including the development of strategic reserves to cushion future shocks.
Meanwhile, Bird raised concerns over Nigeria’s crude oil allocation system, alleging that the Dangote Refinery is often under-supplied and does not receive its preferred crude grades.
According to him, the situation forces the refinery to source crude from the international market at a premium, despite those same Nigerian grades being exported abroad.
He disclosed that the refinery currently pays over $18 per barrel above benchmark prices for preferred crude, significantly increasing production costs.
Bird also noted that while part of the refinery’s crude needs are met under the Federal Government’s “Crude for Naira” initiative, the allocation covers only about 30 to 35 per cent of requirements and is still priced at international rates without subsidies.