Dangote Refinery has explained why petrol prices in Nigeria remain high despite the country’s domestic refining capacity.

According to the refinery’s management, the expected relief for consumers has been limited by global market forces, including tensions in the Middle East, one of the world’s major crude oil hubs.

Speaking on Arise Television, the Managing Director, David Bird, said, “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. We try and maintain some stability within a commercially acceptable range, but all our cost inputs—from crude to freight and insurance are impacted.”

Despite recent declines in crude oil prices, petrol continues to sell at an average of N1,300 per litre, following nearly 20 percent upward adjustments last week due to increases in international crude prices.

Bird acknowledged the burden on consumers, describing the current situation as part of a broader cost-of-living crisis. “This is a cost-of-living crisis; every facet of the modern economy is impacted by energy,” he said. He added that even if global conflicts ended immediately, supply chain disruptions would continue for months.

Looking ahead, Bird urged Nigerian authorities to rethink cost structures and regulatory pressures affecting the industry. “I think 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,” he said.

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He also highlighted the importance of long-term planning, including building strategic reserves. “Government and industry must think the unthinkable; COVID should have woken us up about the vulnerability of global supply chains,” he noted.

Bird also raised concerns about Nigeria’s crude allocation system, which under-supplies the Dangote Refinery and forces it to rely on imported crude oil. “Nigeria has a wide variety of crude grades, all exported from different terminals and we have a preference.

Our hardware is designed around a certain crude slate, and we can certainly optimise the different crude grades from Nigeria. So, we submit our preferences. And not only do we not get the full allocation, very often we don’t get the grades that we are highlighting as our preferences.

“So, our request is, can we get more and can we be transparent on the allocation methodology? Because then that allocates about 30% of our crude diet under the Crude for Naira program.

However, given our preference for Nigerian grades, we go back into the international market and we find those very same grades that we have preference that were denied to us, now being offered on the international market in US dollars.

And so, we do purchase those. And right now, there’s obviously a global thirst for crude, no matter where it comes from. So that has meant there’s a significant premium being attached to Nigerian crude grades.

“As of now, we’re paying over $18 a barrel premium for those same Nigerian crude grades. So, 30, 35% under Crude for Naira, we get allocated with no discount, no subsidy. It is international benchmark pricing. Then, we have to pay international benchmark freight rates. And freight has also been severely impacted and gone up, insurance rates, et cetera.”

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