Pump Prices Could Drop Below ₦400 Per Litre, Say Refiners.
Nigeria’s pump prices could potentially drop below ₦400 per litre if the federal government reinstates its halted naira-for-crude-oil exchange policy, according to local refinery operators. Despite the global fall in crude oil prices, Nigerians are unlikely to see a corresponding decrease in fuel prices unless urgent policy measures are taken, warns the Crude Oil Refinery Owners Association of Nigeria (CORAN).
The group stated that with Brent crude potentially falling to $50 per barrel, the price of Premium Motor Spirit (PMS) in Nigeria could reasonably be pegged at around ₦350 per litre. Yet, domestic fuel prices are approaching ₦1,000 per litre, pointing to what CORAN describes as a major disconnect.
Crude oil prices experienced a sharp decline recently, with Brent dipping to $65 per barrel—its lowest since 2021—following a series of events, including new tariffs imposed by the U.S. and OPEC+’s surprise announcement to boost output. Meanwhile, the U.S. benchmark, West Texas Intermediate (WTI), fell by 7.4%, closing at $61.99. These shifts, combined with rising tensions between the U .S. and China, have heightened concerns about a global economic slowdown.
Back home, however, fuel prices have surged rather than eased. Industry reports show that the ex-depot rate in Lagos rose from ₦860 to ₦900 per litre, despite the landing cost falling slightly to ₦865.
Speaking on the issue, CORAN spokesperson Eche Idoko attributed the situation to systemic inefficiencies. “This is a clear case of structural sabotage,” he said, citing foreign exchange volatility, high transportation costs, and a chain of profit-driven intermediaries as key issues.
“If crude drops to $50, we should be selling fuel at ₦350,” Idoko said. “But non-producing agents—middlemen—manipulate the system to keep prices inflated. They profit from the disorder.”
He emphasised that the suspension of the naira-for-crude initiative had disrupted the market. Under the now-expired deal, the Nigerian National Petroleum Company (NNPC) provided crude to domestic refiners in exchange for naira, shielding them from the volatile dollar exchange rates.
“When the policy was active, fuel prices dropped to around ₦700 and showed potential for further reduction,” Idoko recalled. “But once it ended, prices started climbing again—even though crude prices are falling globally.”
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The arrangement, which started in October and ended this month, included an agreement to supply the Dangote Refinery with 385,000 barrels per day. However, NNPC delivered just 280,000 bpd, falling short of expectations.
Idoko further accused certain vested interests of sabotaging the policy for personal gain. “They are not invested in Nigeria’s progress,” he stated. “They prefer to bring in low-quality imported fuel, sell it at high prices, and keep local refiners dependent on foreign crude.”
In the absence of the naira-for-crude deal, local refiners have been forced to seek crude supplies internationally—an ironic twist for a nation striving to become self-reliant in refining.
He also pointed to compounding challenges such as logistics costs, exchange rate pressures, and the continued influence of intermediaries. “It’s like renting a house and paying agency fees,” he explained. “These middlemen don’t refine, don’t produce, yet they drive up costs by taking a slice of every transaction.”
At present, fuel prices across the country range from ₦920 to ₦970 per litre, depending on the region—worsening inflation and adding to economic strain for ordinary citizens.
CORAN believes that the inability of local pump prices to reflect the global decline in crude points to a wider policy failure. “This policy proved effective,” Idoko insisted. “If the government chooses not to renew it, they must question who is truly benefiting from that decision.”
As economic pressures mount, industry observers say the government’s next steps on the naira-for-crude initiative will be crucial. Whether it’s reintroduced or permanently shelved could determine if Nigerians get relief at the pump—or continue to bear the burden of soaring fuel prices.
Content Credit: Oyedepo Oluwafifedoyinsola
Image Credit: impactngr.com
