Market News

Written by Chika Izuora

There is a projection that buying petrol from Dangote will save Nigeria at least N24 trillion ($14.3 billion)yearly.

For decades, Nigeria has relied on imports to meet fuel demand, spending about $15 billion annually but with new alliances aimed at cutting these expenses by investing in homegrown energy, targeting affordable petrol for consumers and boosting the economy.

This is as Nigeria’s petrol imports went up in October, according to a report from the Organisation of the Petroleum Exporting Company (OPEC).

Data shows that oil marketers in the country imported a whooping 1.5 million metric tonnes of petrol and 414,018.764 metric tonnes of diesel respectively between October 1 and November 11, 2024, a document obtained by the press. These petroleum products imported into the country are valued at about $1.9 billion or nearly N3 trillion, according to one estimate.

This increase happened even though the Dangote Petroleum Refinery began making petrol in September.

OPEC’s Monthly Oil Market Report showed that while petrol imports are still 60 percent lower than the same time in 2023, more petrol was brought into the country between September and October 2024. 

During this time, several ships arrived in Nigeria carrying petrol, particularly when fuel sellers were having disagreements with the Dangote refinery. 

Reports show that during October, most of the petrol imported into Nigeria and West Africa came from Europe.

 OPEC quoted Argus (a market analyst) saying: “Gasoline exports to West Africa strengthened and compensated for a drop in flows to the US. 

Imports to Nigeria were reported to have surged compared to the level registered in September despite still remaining 60 per cent lower, year-on-year.” 

However, the new agreements among the Nigerian National Petroleum Company Limited, Dangote Refinery and independent oil marketers may end long-standing issues over fuel imports. 

The NNPC and oil marketers will now take petrol directly from local refiner Dangote instead of importing it, aiming to reduce import costs, stabilise petrol prices and make fuel more affordable for consumers. 

Energy expert Faith Nwadishi praises this move for its potential to strengthen the economy. ‘If we begin to buy products from Dangote, we will be able to save at least N24 trillion ($14.3 billion) yearly,’ said Nwadishi. “Nigeria depends on that. The economy depends on that. If there’s no fuel, you see the hardship it takes on people. Products cannot come from farms to markets,” according to the Voice of America (Africa) report.

Sharing the optimism, David Etim, an energy expert and entrepreneur, said he believes this is the right step toward energy independence.

‘Energy self-sufficiency or energy dependency is actually a national security issue,’ said Etim. “It’s just like food security. No country in the world that depends on outsiders to provide such an essential input to its social life as energy can call itself independent. So, the fact that Nigeria has moved from energy dependency to energy independence is a significant move in a very positive direction,” he said.

Nigerians currently pay high fuel prices, with some areas reporting more than N1,200 per litre ($0.71). This deal raises hopes as the oil sector shifts to local production.

Consumers such as Felix Chukwuemeka, an Abuja businessman feeling the heat of rising prices, eagerly await relief.

“From my house to my junction, we used to pay N300 ($0.18), but now we are paying N600 ($0.36),” said Chukwuemeka. So, you can see the expense is doubled. … It would be very exciting to many of us, especially in the business sector, if the price of petrol can be reduced, because it will really enhance our businesses.”

Despite the optimism, Nigeria’s four refineries remain nonfunctional, raising sustainability concerns.

Senior economist, Paul Alaje emphasised the need to revamp refineries and stabilise the currency for lasting gains. 

“The more you abandon your refinery, it becomes moribund, it becomes a sunk cost to the economy. And sadly, this is the reality today. Nigerians will be looking at a price between N500 to N600 per litre of PMS (petroleum motor spirit). But, do I think this is achievable even under this current agreement? I doubt very much. Why? There is a big elephant in the room. This elephant is called the exchange rate,” he stressed.

While the new alliances in the oil sector signal a positive step toward stable, affordable fuel, experts stress the need for transparency, accountability and strict implementation to ensure that Nigerians benefit. 

For now, there’s been no notable impact on the cost of PMS across the country.

However, if successful, these agreements could mark a major shift for Nigeria’s oil industry securing energy independence, easing prices and boosting economic growth