… Dangote Blames Cross-Border Smuggling
The Nigerian National Petroleum Company Limited (NNPCL) has raised petrol pump prices across some of its retail outlets in Lagos and Abuja, pushing the cost of Premium Motor Spirit (PMS) to as high as N1,430 per litre.
Checks in the two cities showed that several NNPCL stations were selling petrol between N1,395 and N1,430 per litre, representing increases of roughly N50 to N80 per litre, depending on location.
The latest increase adds fresh pressure on Nigerian households and businesses already facing elevated transport, logistics and operating costs, while the downstream market continues to adjust to higher crude oil and refined-product prices.
The NNPCL price adjustment comes days after the Dangote Petroleum Refinery increased its petrol gantry price by N85, from N1,265 to N1,350 per litre, effective September 12. The latest adjustment was the refinery’s fourth price increase since August 21, taking its cumulative increase over the period to N185, or about 15.9 per cent.
Dangote: Smuggling keeps Nigerian petrol prices high
Against the backdrop of the latest pump-price increase, Aliko Dangote, President and Chief Executive of Dangote Industries Limited, has attributed part of the persistent pressure on petrol prices to cross-border smuggling.
Speaking on ARISE Television’s The Morning Show on Tuesday, Dangote argued that petrol remains relatively cheaper in Nigeria than in neighbouring countries, creating a financial incentive for illegal exports.
According to him, the price differential means traders can buy petrol in Nigeria and move it across the border for a substantial margin.
“The expensive is relative,” Dangote said, arguing that consumers should compare Nigerian petrol prices with those in neighbouring countries.
He said petrol prices in some neighbouring markets could be 30 to 50 per cent higher than in Nigeria, although the exact price differences vary by country, taxes, exchange rates and whether wholesale or retail prices are being compared.
Dangote specifically cited Niger Republic, saying that even with petrol at N1,350 per litre in Nigeria, the price across the border could still be significantly higher.
He argued that such a differential could provide smugglers with an immediate arbitrage opportunity.
“Even now, at N1,350, the price in Niger is 20%, 25% more than in Nigeria,” he said.
The refinery owner said smugglers could move products ostensibly destined for parts of northern Nigeria and divert them across the border, particularly through established border trading routes.
Domestic refining has not eliminated global price pressures
The latest price increases also highlight a central issue confronting Nigeria’s deregulated downstream petroleum market: local refining does not automatically insulate domestic fuel prices from international oil-market movements.
Although Nigeria is now capable of producing substantial volumes of petrol domestically through the Dangote refinery, the economics of refining remain linked to the cost of crude oil, foreign exchange, logistics, financing and regional product prices.
Dangote has previously maintained that the refinery cannot sustainably sell petrol substantially below international market economics while sourcing crude at prevailing global prices.
The refinery’s latest N85 increase came as international crude prices moved sharply higher amid geopolitical disruptions affecting global supply and shipping routes.
The result is a more direct transmission of global oil-market volatility into Nigeria’s domestic fuel market.
Pump prices rise after Dangote adjustment
The impact of the Dangote price revision was quickly reflected at filling stations.
Reports showed petrol selling at about N1,395 per litre at some retail stations in Lagos shortly after the refinery’s latest adjustment. Prices varied considerably between marketers and locations, with some outlets still selling below the new levels as they worked through existing stocks.
The NNPCL’s latest retail prices of N1,395-N1,430 therefore represent another upward step in a market where pump prices increasingly reflect wholesale acquisition costs, transportation expenses and local distribution economics.
The variation between stations also underscores the absence of a single nationwide pump price under the current market structure.
Global oil market adds another layer of pressure
The domestic fuel-price increase is occurring against a highly volatile international oil backdrop.
Brent crude fell 93 cents, or 0.86 per cent, to $107.82 a barrel early Wednesday, while U.S. West Texas Intermediate (WTI) declined 97 cents, or 0.92 per cent, to $104.86.
The decline followed an unexpected increase in U.S. crude inventories. Data from the American Petroleum Institute showed that U.S. crude stocks rose by 7.1 million barrels in the week ended September 11, against analysts’ expectations for a draw of about 1.6 million barrels.
The inventory increase provided some downward pressure on prices, but supply risks remain significant.
Saudi Arabia has suspended oil loadings at its Yanbu port after an attack on its East-West pipeline, a critical infrastructure route capable of moving about 4 million barrels of crude per day, equivalent to roughly 4 per cent of global supply.
The disruption has added a geopolitical risk premium to oil prices, even as traders monitor U.S. inventory data and the broader outlook for global demand.
What it means for Nigerian consumers
For Nigerian consumers and businesses, the combination of higher domestic refinery prices and elevated international crude prices could keep petrol costs under pressure.
Higher petrol prices have implications well beyond the filling station. They feed into transportation costs, food distribution, manufacturing, construction, aviation logistics and the operating expenses of small and medium-sized businesses.
The impact is particularly significant in Nigeria because road transport remains central to the movement of people and goods across the country.
At the same time, higher crude prices could improve export earnings for Nigeria as an oil-producing country, provided production levels are sustained. The benefit to government and industry revenues, however, has to be weighed against the higher domestic cost of petroleum products and the broader inflationary consequences.
Dangote said the refinery would continue supplying the domestic market despite international disruptions and argued that Nigeria should not face fuel shortages or prolonged queues because of the global supply situation.
The immediate challenge for the downstream sector is therefore no longer simply whether Nigeria can refine enough petrol. It is increasingly about the price at which crude can be sourced, the cost of refining and distribution, the exchange rate, regional price differentials and the ability to prevent large-scale diversion of domestically supplied fuel across Nigeria’s borders.
For a country that has moved from heavy dependence on imported petrol towards large-scale domestic refining, those factors will determine how much of the benefit of local production ultimately reaches Nigerian consumers.