Oil and gas specialist Henry Adigun has pointed to production costs, which are priced in US dollars, as a key factor preventing the $20 billion Dangote Refinery from offering petrol at a price lower than the current rate at Nigerian National Petroleum Company Limited (NNPCL) retail outlets.

Speaking on Channels Television’s socio-political program Inside Sources, hosted by Laolu Akande, Adigun explained on Friday that the petrol produced at the refinery is of the highest global quality, and with better quality comes higher pricing.

Nigeria's petrol crisis

Nigeria, the most populous country in Africa, is grappling with petrol issues, as none of its state-owned refineries are currently operational.

The nation depends largely on imported refined petroleum, with the state-owned NNPC Limited being the main importer of these vital resources.

Since the removal of fuel subsidy in May 2023, petrol prices have tripled, worsening the challenges faced by citizens who rely on petrol to power their vehicles and generators due to a long-standing unreliable electricity supply.

Dangote will not sell at a loss

The expert explained that the fuel industry operates in US dollars, giving Aliko Dangote, the billionaire businessman and owner of the refinery, the right to set the price for the petrol his refinery produces.

Adigun also noted that Dangote receives only 40% of the crude oil from NNPC, while he has to spend additional funds to purchase the rest from countries like the United States and others.

He said:

“And I keep telling everybody, the man (Dangote) did not take the loan in naira; he took it in dollars and he has to pay the loans back in dollars.

“He cannot. I did the mathematics of his refinery, and I said it in the meeting we had with his people and his team that there is no way your petrol will come out at less than N850. There is also retail cost.”

Petrol prices at NNPCL outlets across the country were increased from approximately N568 to more than N855.

Dangote stated that once his company completes arrangements with NNPCL, the product will be available in the market.

NNPCL later announced that it plans to begin sourcing fuel from the Dangote Refinery by mid-September.