The management of the Dangote Refinery has attributed the continued rise in petrol prices across Nigeria to prevailing global market conditions, despite the country’s growing domestic refining capacity.
Speaking during an interview on Arise Television, the Managing Director of the refinery, David Bird, explained that the facility operates within the realities of the international market and does not benefit from subsidies. According to him, this exposes operations to price volatility driven by geopolitical tensions, particularly ongoing crises in the Middle East, a major global crude oil hub.
Bird noted that while the refinery makes efforts to maintain price stability within a commercially viable range, its operational costs are significantly influenced by external factors. These include the cost of crude oil, freight charges, and insurance, all of which fluctuate in response to global developments.
A recent market survey showed that although crude oil prices declined earlier in the week, petrol pump prices across Nigeria have remained unchanged. This contrasts with the swift upward adjustments recorded last week when crude prices rose, leading to an average pump price of about N1,300 per litre nationwide.
Describing the situation as a broader economic challenge, Bird said rising energy costs are fueling a cost-of-living crisis, affecting virtually every sector of the economy. He added that even if global conflicts were resolved immediately, disruptions within supply chains would likely persist for several months.
Looking ahead, Bird called on the Nigerian government to adopt a more comprehensive approach to addressing challenges within the petroleum sector. He emphasized the need to consider not only crude oil prices but also the overall cost of doing business in the country. He also stressed the importance of long-term planning, including the establishment of strategic reserves to cushion future shocks, drawing lessons from the COVID-19 pandemic and its impact on global supply chains.
The refinery’s managing director also raised concerns about the crude oil allocation system in Nigeria, which he said has consistently fallen short of meeting the refinery’s needs. According to him, the facility often does not receive its preferred crude grades, despite submitting specific requests.
He explained that while about 30 to 35 percent of the refinery’s crude supply comes through the Crude-for-Naira arrangement, the volumes and grades allocated are insufficient. As a result, the refinery is compelled to source additional crude from the international market—sometimes the same Nigerian grades it had earlier requested but was unable to obtain locally.
Bird revealed that the refinery currently pays a premium of over $18 per barrel for such crude on the global market, in addition to international benchmark pricing, freight costs, and rising insurance charges. He noted that the strong global demand for crude oil has further driven up these premiums.
He therefore called for greater transparency in the allocation process and urged authorities to ensure more consistent and adequate supply to support local refining and help stabilise fuel prices in the country.
Dangote Refinery Blames High Petrol Prices on Global Market Forces, Supply Constraints
