March 5, 2025/CSL Research
In a significant move that underscores the shifting dynamics of Nigeria’s petroleum market, the Nigerian National Petroleum Company Limited (NNPC), according to news reports has adjusted the pump price of Premium Motor Spirit (petrol) at its retail outlets. This change comes as a response to the recent price reduction by the Dangote Petroleum Refinery.
On Monday, several NNPC-owned filling stations were reported to have lowered their petrol prices to ₦860 per litre. This marks a notable drop from the ₦945 per litre that was recorded at NNPC outlets just a day before. Though an official statement from NNPC Retail has yet to be issued, industry observers see this as a direct response to Dangote Refinery’s strategic reduction of its ex-depot petrol price from ₦890 to ₦825 per litre. This recent adjustment is the refinery’s second price cut in the new year and its third in just two months.
ccording to a statement from the management of Dangote Refinery, the price reduction aims to provide financial relief to Nigerians ahead of the Ramadan season while supporting President Bola Tinubu’s economic recovery policies. NNPC has recently confirmed that it now sources petrol from the Dangote Refinery for its Lagos-based stations, a development that further cements the refinery’s role in Nigeria’s energy sector.
The company also stated that while it has not imported petrol this year, it remains open to the possibility should the need arise. Though importation has declined significantly, some independent dealers continue to bring refined petroleum products into the country.
Meanwhile, Nigeria’s oil refining sector showed signs of a long-awaited recovery in the fourth quarter of 2024, recording a GDP growth of +9.59% year-on-year. This marks the sector’s first positive growth in twenty-four consecutive quarters, a turnaround largely attributed to the commencement of petrol refining operations at the Dangote Petrochemical Refinery Limited. In February, the Dangote Petroleum Refinery announced it had ramped up its daily production to 85% of its 650,000bpd capacity, with plans to reach full capacity within the next 30 days.
The refinery began processing crude into products such as diesel, naphtha, and jet fuel in January 2024. By September, it had started producing petrol, despite facing crude supply challenges that stirred controversy within the petroleum sector. With plans to ramp up to its full capacity, we anticipate that the refinery will play an increasingly vital role in boosting Nigeria’s manufacturing sector GDP in the coming quarters.
Despite initial controversies, the Dangote Refinery is proving to be a transformative project for Nigeria. Its operations hold the potential to drive economic growth, enhance energy security, create jobs, save foreign exchange, and ultimately end the country’s reliance on imported refined petroleum products. By refining crude oil locally, the refinery could position Nigeria as a major regional hub for refining and petrochemical production. In the long run, the Dangote Refinery represents a critical step toward securing Nigeria’s energy future. As the refinery scales up operations, its impact on the economy is expected to grow, setting the stage for a more stable and prosperous energy sector in Nigeria.
