The Dangote Petroleum Refinery has defended its recent petrol price increases, citing the high cost of previously purchased crude oil and the lengthy logistics required to procure, transport, and deliver feedstock to the facility.
The justification comes as pump prices for Premium Motor Spirit rise across Nigeria, ranging from N1,310 to N1,400 per litre depending on the region. In Lagos and Ogun states, petrol sells for approximately N1,310 per litre, while prices in northern states and other areas further from the refinery have reached N1,350 or more.
The retail price increases follow Dangote Refinery’s decision to raise its PMS gantry price by N65 per litre—from N1,200 to N1,265—effective August 29. This marked the third price hike announced by the refinery within an eight-day window.
The price adjustments occurred despite a drop in global crude oil benchmarks, even amidst ongoing US-Iran tensions. However, a senior executive at the refinery, who requested anonymity as he was not authorized to speak publicly, stated that current international crude prices cannot be the sole factor in determining the price of petrol produced from previously acquired inventory.
The executive highlighted the significant time lag between purchasing crude and its arrival at the refinery.
“If you want to buy crude at today’s price, when do you think you will complete the actual transaction to purchase the crude? When will you get a laycan? When can you get a ship chartered and a charter party agreement signed? When will the ship go to load the crude and secure the laycan for discharge? When is the sailing time before the crude eventually gets into your tank?” the source said.
He further questioned how the facility should manage inventory purchased when market rates were higher.
“And what will happen to the huge quantities of expensive crude that you bought long ago and stored in the tanks? These are the factors determining the change in prices, not an immediate crude price change,” the source added.
The refinery initiated its recent sequence of hikes by raising its gantry price from N1,165 to N1,185 per litre on August 21. Five days later, it added N15, bringing the price to N1,200 per litre on August 26, before the August 29 increase to N1,265. In total, the gantry price rose by N100 per litre (about 8.6 percent) in eight days, lifting the coastal PMS price from N1,582,380 to N1,669,545 per metric tonne.
In a customer directive, the refinery instructed buyers to return existing Authorisations to Collect for repricing and new volume contracts before loading could resume.
The cost disparity across different regions is largely driven by transportation and distribution expenses incurred when moving fuel from coastal facilities to distant markets. To address this, Dangote Refinery plans to roll out a nationwide free distribution initiative.
Data from the Major Energies Marketers Association of Nigeria Energy Bulletin showed the refinery’s gantry price at N1,200 per litre on August 27, when the estimated spot import-parity price was N1,222.32 per litre and the NPSC-NOJ spot estimate was N1,221.32 per litre. At that time, Dangote’s price was N22.32 lower than the spot import-parity estimate. The subsequent shift to N1,265 per litre placed the gantry price N42.68 above the August 27 import-parity figure.
Global crude markets have experienced volatility due to geopolitical tensions in the Middle East and concerns over supply routes through the Strait of Hormuz. Oilprice.com reported Brent crude closing at $88 per barrel and WTI at $83, marking a 5 percent decline. The refinery executive emphasized that daily benchmark drops do not reflect the cost of crude already stored in tanks, adding that lowering product prices immediately after a benchmark drop would mean selling fuel refined from expensive stock at reduced replacement values. The issue is compounded by the fact that 30 to 40 percent of the refinery’s crude feedstock is imported, according to a Reuters report from August 26.
Petroleum marketers have expressed concern over the rapid fluctuations, stating that the price changes complicate business planning.
Chinedu Ukadike, National Publicity Secretary of the Independent Petroleum Marketers Association of Nigeria, noted that several variables affect retail pricing.
“We are facing the challenges of the volatility in the market. There are policies of the government, policies of the international market, and exchange rates. These are inherent dispositions to the increase in pump prices. We are not refiners to be able to determine the price of petroleum products,” Ukadike said.
He acknowledged the refinery’s past price adjustments in line with global shifts but pointed out the current planning hurdles.
“But, I also believe that Dangote has been consistent in terms of reducing its price in line with the international market rate. With this situation now, we cannot, at this particular point in time, structure our business. It’s going to be too difficult for us to structure our business,” he stated.
Ukadike added that global instability would continue to impact domestic pricing.
“The more the Iran and United States crisis continues to persist, the more we’ll be having these irregularities in price,” he said. “Also, bear in mind that the price of crude oil is determined by the international market. So, for all the independent marketers, we will continue to strive. Prices have been fluctuating, and we are still loading. The price of petrol will continue to be volatile as long as the price of crude is not stable and other factors relating to the financial situation.”
He noted that marketers and consumers ultimately absorb the burden of these market shifts.
The development coincides with statements from African Democratic Congress presidential candidate and former Vice President Atiku Abubakar, who stated he would reintroduce fuel subsidies to alleviate economic hardship and lower the cost of living.
