In a significant shift in Nigeria’s petrol pricing landscape, the Dangote Petroleum Refinery is set to determine the price of petrol starting from October 2024, according to a report by Bloomberg.
This development follows a recent announcement by Aliko Dangote, the chairman of Dangote Industries Limited (DIL), about the commencement of petrol production at his refinery.
On Tuesday, Aliko Dangote officially declared that his refinery would begin producing petrol.
Dangote indicated that the pricing of petrol from his refinery would initially be set by the federal executive council (FEC) and the Nigerian National Petroleum Company (NNPC) Limited.
However, the latest Bloomberg report reveals a shift in this plan.
According to Bloomberg, “Nigeria will allow Dangote to set the price of gasoline to petroleum marketers starting next month.”
This move means that petrol marketers will be able to purchase petrol directly from the Dangote Refinery, and the refinery will have the authority to set the price.
Temitope Ajayi, the Senior Special Assistant to the President on Media and Publicity, confirmed this development in a statement to Bloomberg.
Ajayi emphasized that Dangote Refinery would not sell petrol below market price.
“Dangote Refinery will certainly not sell their products below market value as a business that was set up to make profit,” Ajayi said.
He added that it would be difficult for NNPC or the federal government to control the pricing for a private business.
Ajayi further explained that the role of the petroleum industry regulator would be to ensure product quality and fair pricing.
This regulation aims to prevent businesses from exploiting consumers and ensure that prices remain reasonable.
Nigeria has been grappling with a prolonged petrol scarcity that has persisted for weeks.
The scarcity has led to long queues at filling stations and has significantly impacted daily life for many Nigerians.
On September 3, the national oil firm, NNPC, raised the pump price of petrol to N855 at its retail outlets in response to the supply shortages.
The scarcity has fueled concerns about the effectiveness of the current pricing mechanisms and the need for a more market-responsive approach.
In a related development, Adedapo Segun, the Executive Vice President of Downstream at NNPC, stated that the company would supply over 17.6 million barrels of crude oil to the Dangote Refinery between September and October.
Segun noted that the current petrol price does not fully reflect market realities and expressed support for moving towards market-reflective prices to foster competition.
“The current petrol price does not still reflect market realities,” Segun said. “Nigeria should move towards market-reflective prices to promote competition.”
This statement highlights the ongoing debate about how best to regulate petrol prices in Nigeria and the potential benefits of aligning prices more closely with market conditions.
The regulation of petrol prices in Nigeria has long been a contentious issue.
Historically, the government has played a significant role in setting fuel prices, often leading to price distortions and supply shortages.
The deregulation of the downstream sector, introduced by the Petroleum Industry Act (PIA) of 2021, aimed to address these issues by allowing market forces to influence pricing.
Under the PIA, petrol prices are now determined by market conditions rather than government mandates.
This shift is intended to create a more competitive environment and improve the efficiency of the sector.
However, the transition has not been without challenges, including the recent fuel scarcity and ongoing debates about the impact of deregulation on consumers.
The announcement that Dangote Refinery will set petrol prices has been met with mixed reactions.
On one hand, there is optimism that the refinery’s operations will help stabilize fuel supply and address the current scarcity.
On the other hand, there are concerns about how the new pricing system will affect consumers, especially given the recent history of high petrol prices and supply disruptions.
