The landscape of fuel prices in Nigeria is undergoing a significant transformation as the Warri Refining and Petrochemicals Company Limited has officially resumed operations on December 31, 2024. This refinery, with a capacity of 125,000 barrels per day, is expected to contribute to a reduction in refined petroleum prices, following the earlier restart of the Port Harcourt Refinery in November 2024. Both Mele Kyari, CEO of the Nigerian National Petroleum Company Limited (NNPCL), and Farouk Ahmed, CEO of the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), have indicated that increased competition among domestic refiners will likely drive prices down. [b53b74c7]
However, recent developments have complicated the pricing landscape. On January 20, 2025, Dangote Refinery announced an increase in the ex-depot price of Premium Motor Spirit (PMS) from 899.50 naira to 950 naira per litre. This adjustment was attributed to a 15% rise in global crude oil prices, with Brent Crude increasing from $70 to $82 per barrel. The refinery stated it has absorbed approximately 50% of these cost increases to maintain retail prices at 970 naira per litre, significantly lower than the potential range of 1,150 to 1,200 naira. The company has committed to publishing ex-depot and pump prices weekly for transparency. [d9d05974]
This development comes on the heels of a recent price reduction announced by Aliko Dangote, President of Dangote Industries Limited, who set the price of petrol at 899.50 naira per litre on December 19, 2024. This marked a decrease from the previous rate of 970 naira, a move that was quickly matched by NNPCL, reflecting a competitive market response. [0a5136d2]
The backdrop to these changes includes Nigeria's ongoing economic challenges, with inflation rates soaring to 33.9% as of October 2024, largely driven by rising food and energy costs. The removal of petrol subsidies in May 2023 had previously caused petrol prices to spike, reaching as high as 1,070 naira per litre. [3d291881]
President Bola Tinubu praised the resumption of operations at the Warri refinery, emphasizing its importance for energy security and the goal of making Nigeria a net exporter of petroleum products. The Warri refinery has undergone rehabilitation since 2021, with an investment of $898 million aimed at revitalizing its operations. [b53b74c7]
Despite these positive developments, the economic landscape remains challenging for many Nigerians, who continue to face high fuel costs. The disparity in petrol prices is stark when compared to the United States, where prices hover around $2.70 per gallon, equivalent to approximately 5,200 naira per gallon. This highlights the broader economic struggles within Nigeria, where the minimum wage remains at 70,000 naira per month. [c920c9e7]
As the situation evolves, the combined effects of the resumed refinery operations and competitive pricing strategies could play a crucial role in shaping Nigeria's oil sector and its overall economy, even as fluctuations in global oil prices continue to impact local pricing. [d9d05974]