The federal government is considering granting Aliko Dangote’s refinery the authority to set petrol prices, a decision that could reshape the government’s control over fuel prices paid by consumers.
According to officials familiar with the matter who spoke with Bloomberg, the government will permit Dangote to set the price of gasoline for petroleum marketers starting next month.
Despite being Africa’s largest oil producer, Nigeria has relied on imported petrol, heavily subsidising its cost at a substantial annual expense.
However, a significant shift is on the horizon as Dangote’s massive refinery near Lagos, the country’s commercial capital, begins local petrol production.
The Nigerian National Petroleum Company (NNPC) Limited, which is the sole importer of petrol, has been selling the fuel below the market cost since August 2023 to stabilise prices.
However, when a brief removal of the subsidy led to a sharp rise in inflation and sparked public protests, the government reinstated the subsidy but recently raised the price by 45 percent, bringing it closer to market rates at N897 naira ($0.56) per litre.
This is contrary to the impression given by Aliko Dangote, the President of Dangote Group when he met with journalists to present the samples of the company’s petrol product.
When asked by journalists about the price Nigerians will pay for petrol from the Dangote Refinery, Dangote said that the Federal Government will be responsible for setting the price. “We are waiting for the Federal Government to decide. They will determine the price of Premium Motor Spirit,” he said.
However, credible sources within the government and the NNPC have contradicted this claim, suggesting that the situation may be more complex.
Sources claim that Dangote Refinery is strategically positioning itself to place the blame on the government if its fuel is launched at a price significantly above N1000 per litre, which seems highly probable.
“The Federal Government or NNPCL will not set the price for Dangote Refinery,” one of the sources said. “Dangote Refinery will fix its own price. Under the agreement, NNPCL is to sell crude to Dangote Refinery in Naira. Dangote Refinery in turn will sell its product to Nigerians in Naira.
“It is a case of willing buyer and willing seller. NNPCL cannot fix prices for Dangote Refinery. NNPCL is not the regulator and cannot be under the Petroleum Industry Act.
“So it’s not correct to say the NNPCL will fix the price,” the source said.