Nigerians to Face Petrol Price Increase as NNPC Ends Exclusive Deal with Dangote Refinery
Abuja, Nigeria – Nigerians are bracing for an imminent increase in petrol prices as the Nigerian National Petroleum Company Limited (NNPC Ltd) prepares to end its exclusive purchase agreement with Dangote Refinery, opening the market to other marketers. This development, The Bureau Newspaper has learnt, could push petrol prices to nearly N1,000 per litre across the country.
The decision is expected to drive pump prices significantly higher, as marketers will now negotiate prices directly with Dangote Refinery under a fully deregulated system. According to data obtained from the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), petrol prices are set to rise from the current N897 per litre to as high as N991.21 in Lagos and N1,059.39 in Maiduguri.
A detailed breakdown of the anticipated price hikes across Nigeria shows significant regional disparities. In Abuja, the nation’s capital, petrol could sell for as much as N1,029.01 per litre, while prices in Kano may hit N1,040.31 per litre. In the South-South city of Calabar, the price is expected to reach N1,007.35, while Sokoto, in the North-West, could see prices soar to N1,045.72. Other major cities such as Ibadan and Enugu may witness petrol prices of N999.27 and N1,022.63 per litre, respectively.
End of NNPC’s Exclusive Role
This price increase follows NNPC Ltd’s decision to stop being the sole off-taker of petrol from Dangote Refinery. The move aligns with the government’s deregulation policy, allowing other marketers to buy petrol directly from the refinery.
The NNPC had previously been the only entity allowed to purchase from Dangote Refinery, acting as the middleman and providing a subsidy to offset the cost for consumers. With this change, petrol prices will now reflect market rates and global crude oil prices, which could lead to even steeper increases depending on fluctuating exchange rates.
Subsidy Implications and Potential Effects
According to the NMDPRA, NNPC was subsidizing petrol to the tune of approximately N134.5 per litre in eight major cities, including Lagos, Abuja, Kano, and Calabar. This subsidy has kept petrol prices lower than they would be under market conditions. However, with NNPC stepping away from this role, prices will now align with the actual market rates.
In Lagos, the indicative pump price is projected to be N991.21, compared to the current N855 per litre, while in Maiduguri, prices could skyrocket to N1,059.39, up from the current N924 per litre. These increases are likely to affect transportation costs, food prices, and inflation across the country, exacerbating the cost-of-living crisis for many Nigerians.
The removal of the NNPC’s subsidy role could lead to a competitive market, but it may also cause short-term instability as marketers adjust to the new pricing system. Despite this, industry experts say that opening up the market to competition could eventually help stabilize supply and foster investment in Nigeria’s downstream petroleum sector.
Regional Price Variations
The prices of petrol in different regions will depend on their proximity to the Dangote Refinery in Lagos, as well as transportation and distribution costs. The closer cities, like Lagos and Ibadan, are expected to see lower price increases, while northern cities, such as Kano, Maiduguri, and Sokoto, will experience some of the highest prices due to their distance from the refinery.
Future Outlook
While the anticipated price hikes have raised concerns among Nigerians, experts predict that the liberalized market could eventually foster a more efficient and competitive petroleum sector. In the meantime, citizens will face significant cost increases, as market forces drive petrol prices in a fully deregulated system.
NNPC and Dangote Refinery have yet to issue official statements on this development, but the implications for consumers are becoming clearer as the market prepares for the transition to a more open pricing system.