Late last year, the Dangote Refinery disrupted Nigeria’s oil market by reducing petrol prices, triggering fluctuations as fuel marketers adjusted to the shift brought by the world’s largest single-train refinery.
During the festive season, the refinery lowered the ex-depot price of Premium Motor Spirit (PMS) to N899.50 per liter, down from N970 in November.
More recently, two weeks ago, Dangote Refinery announced another reduction, lowering its retail price from N950 to N890 per liter, easing market pressures and fueling optimism about potential long-term deflation in Nigeria’s energy sector.
Before President Bola Tinubu’s administration, petrol was sold for as low as N180 per liter. However, following the removal of fuel subsidies, prices soared, reaching N1,200 per liter at one point.
The shift to local refining, rather than relying on costly imports, has led many experts to believe fuel prices could stabilize at lower levels, helping curb the country’s rising inflation.
Since the fuel subsidy removal and the floating of the naira, inflation in Nigeria has surged from 22.22% to 34.80%.
Despite this, projections suggest that fuel prices—and inflation—may soon decline, a sentiment echoed by the Organization of the Petroleum Exporting Countries (OPEC).
A recent OPEC report highlighted that the Dangote Refinery’s full-scale operation could stabilize fuel supply and lower prices.
“After the Nigerian economy recorded healthy growth in Q3 2024 across key sectors, economic growth is anticipated to have been steady in Q4 as well,” the report stated.
It noted that while inflation remains high, early signs of cooling have emerged, partly due to base effects from the naira’s devaluation.
The report also emphasized that with the Central Bank of Nigeria (CBN) nearing the end of its tightening cycle, economic pressures could ease further.
In January, Dangote Refinery officials announced plans to increase production from 500,000 barrels per day (bpd) to 650,000 bpd by June 2025.
A major hurdle to reaching full capacity has been the insufficient crude oil supply from Nigeria’s domestic market.
Currently, the Nigerian National Petroleum Corporation (NNPC) supplies between 350,000 and 450,000 bpd to the refinery.
To bridge the gap, Dangote Refinery intends to import crude oil, which is expected to push production to its full 650,000 bpd capacity.
With its growing production and price adjustments, Dangote Refinery is poised to reshape Nigeria’s fuel market, potentially lowering costs for consumers while contributing to economic stability.
