Nigeria’s fuel price battle deepens as marketers hint petrol could drop below $0.60/litre

Nigeria's government has intensified pressure on fuel marketers to reduce petrol prices, arguing that current pump prices no longer reflect falling global crude oil costs, while independent marketers say prices could eventually fall below N800 ($0.58) per litre if wholesale supply costs continue to decline.

• Nigeria's government says current petrol prices are no longer consistent with falling global crude oil prices and has urged marketers to cut pump prices.
• Fuel marketers say petrol prices could fall below N800 ($0.58) per litre if wholesale supply costs continue to decline and direct purchases from the Dangote Refinery expand.
• The dispute highlights the challenge of ensuring deregulation delivers lower prices for consumers rather than higher industry margins.
• The outcome could shape inflation, consumer spending and investor confidence in Africa's largest economy.

The fresh developments emerged after a closed-door meeting between the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), the Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, the Dangote Petroleum Refinery, and key downstream industry groups in Abuja.

The meeting comes as Nigerians continue to question why retail fuel prices have remained relatively high despite a sharp decline in international crude oil prices over recent months.

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Speaking to journalists after the meeting, Lokpobiri said the government believes current petrol prices are no longer aligned with prevailing market realities.

"My own opinion is that the current prices are not cost reflective," the minister said, adding that the price consumers pay "is not reflective of the cost of crude oil."

He noted that Brent crude had climbed to around $118 a barrel earlier in the year, prompting rapid increases in domestic petrol prices. Now that benchmark prices have fallen to about $71 per barrel, he questioned why retail prices had not declined at a similar pace.

"When it was $118 for Brent, the price was rapidly going up. Now the price has come down drastically. Why is it not coming down in the same way?" he said.

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According to the minister, marketers argued during the meeting that some existing inventories were acquired when international prices were significantly higher.

However, the government maintained that as new cargoes are purchased at lower replacement costs, those savings should be reflected more quickly in wholesale and retail prices.

Lokpobiri described the discussions as "very fruitful" and said marketers had agreed to review the government's concerns and consider practical measures to lower petrol prices.

The government had earlier warned marketers against relying on expensive old inventories to justify current prices, insisting that deregulation should encourage competition and efficiency rather than allow excessive pricing or windfall profits.

Officials also expressed concern over the gap between declining crude prices and domestic fuel costs, arguing that sustained high energy prices continue to feed inflation by increasing transport, food and manufacturing costs.

As part of its response, the government directed the NMDPRA to strengthen market monitoring and improve pricing transparency to ensure reductions in supply costs are passed on to consumers.

It also reiterated plans to operationalise Nigeria's National Strategic Stock to strengthen energy security and help cushion future price shocks.

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The meeting also produced a potentially significant signal from independent fuel marketers.

Abubakar Shettima, National President of the Independent Petroleum Marketers Association of Nigeria (IPMAN), said members were prepared to reduce pump prices further provided acquisition costs continue to fall and marketers are able to maintain sustainable margins.

He revealed that independent marketers had already reduced petrol prices by about N125 ($0.09) per litre nationwide and suggested deeper reductions could follow.

"At any time, when there is a reduction of price, we are ready to reduce the price to even below N800, not even N900," Shettima said, noting that future pricing would depend largely on wholesale purchase costs from private depots and the Dangote Refinery.

Shettima also welcomed Dangote Refinery's decision to begin supplying products directly to independent marketers, describing the arrangement as a positive development that could improve competition within the downstream market and lower distribution costs.

"We are trying to encourage our local refinery," he said, urging government support for domestic refining capacity.

NMDPRA Chief Executive Rabiu Umar said the stakeholder meeting was convened in response to growing public concern over petrol pricing despite weaker global crude markets.

He noted that a similar collaborative approach between regulators and industry had contributed to lower liquefied petroleum gas prices and expressed optimism that the same model could improve pricing in the petrol market.

The outcome of the discussions is likely to be closely watched by businesses and households alike, as fuel prices remain one of the biggest drivers of inflation in Nigeria's economy.

Any sustained decline in pump prices could ease pressure on transport costs, food prices and broader consumer spending, while offering an early test of whether Nigeria's deregulated fuel market can deliver lower prices when international market conditions improve.