On October 10, 2024, Nigeria’s state-owned oil company, NNPC Ltd, raised petrol prices by over 15%, marking the second increase in less than a month.
This step signals the end of a costly fuel subsidy programme that has strained the company’s finances.
New Petrol Prices Across Nigeria
At NNPC fuel stations in Lagos, gasoline prices climbed to 998 naira per litre ($0.6257) from 858 naira. In Abuja, prices rose to 1,030 naira per litre from 950 naira. Long queues formed at stations as Nigerians adjusted to the higher costs.
Full Cost Recovery for NNPC
As Nigeria’s sole importer of refined products, NNPC can now recover its costs fully, buying gasoline from the Dangote Oil Refinery at 898 naira per litre.
This is the first time in 30 years that Nigeria is selling gasoline at full market prices, easing the government’s subsidy burden, projected to cost at least $3.7 billion in 2024.
Background on Subsidy Removal
President Bola Tinubu scrapped the popular but costly petrol subsidy last year to cut government spending. However, soaring inflation and a deepening cost-of-living crisis led to a partial subsidy reintroduction.
By September 2024, NNPC reported it could no longer sustain fuel imports due to financial strain and scarce supplies.
Public and Industry Backlash
The price hike has sparked criticism from labour unions and manufacturers, who warn it will worsen Nigeria’s cost-of-living crisis.
Gasoline prices are a sensitive issue, as millions of households and small businesses rely on fuel-powered generators due to the unreliable national electricity grid.
Dangote Refinery’s Role
In early October 2024, Nigeria began supplying crude oil to the Dangote Refinery in naira, expecting the refinery to meet the country’s full fuel demand.
This month, NNPC is delivering 13 cargoes of crude oil to the facility. Edwin Devakumar, head of the Dangote Refinery, confirmed its capacity to fulfill Nigeria’s fuel needs.
Shift in Fuel Market Dynamics
With gasoline now at market rates, NNPC is no longer the sole buyer of Dangote Refinery products.
Billy Gillis-Harry, head of a local fuel traders association, said, “We have applied to buy directly from the Dangote Refinery, but this hasn’t been finalised yet. For now, we are still buying through NNPC.”
