Oil Cartels Reportedly Responsible for Hike in Petrol Prices by Dangote Refinery
- There are indications that some oil mafia may be trying to frustrate Dangote Refinery's plans to sell petrol cheaply to Nigerians
- Experts have said that the halt in the naira-for-crude deal was a deliberate attempt to sabotage Dangote Refinery
- Petroleum product dealers have also alleged that the constant petrol price crash by the refinery has led to massive losses
Legit.ng’s Pascal Oparada has reported on tech, energy, stocks, investment and the economy for over a decade.
A few months ago, the president of Dangote Industries, Aliko Dangote, raised an alarm that an oil cartel was trying to sabotage his $20 billion refinery.
There are fears that Dangote’s alarm was not a hoax. The refinery has continued to battle crude supply challenges from the Nigerian National Petroleum Company Limited (NNPC), leading to massive imports.
Source: UGC
Dangote accuses IOCs of sabotage
Specifically, Dangote accused international oil companies (IOCs) of deliberately inflating crude oil prices so that his refinery could not afford it.
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Following the naira-for-crude deal between the Nigerian government and local refineries, the Lekki-based facility began to receive feedstock paid for in naira.
The deal eased bottlenecks associated with procuring crude, ending fuel queues at filling stations.
Experts say the deal was responsible for the crash in petrol prices, though crude oil prices also crashed in the international market.
At some point, the refinery reduced ex-depot prices from N970 to N825 per litre, leading to reduced pump prices.
However, importers lamented that the incessant petrol price crash by the refinery resulted in huge losses for them as they had bought the products at high costs prior to the time.
Dangote, NNPC in price war
The petrol price crash by Dangote Refinery also resulted in an intense price war with NNPC, which also reduced costs at its retail outlets to stay competitive.
The intense competition between the two biggest players in the downstream sector led to customers abandoning the state-owned oil company’s retail outlets for Dangote Refinery’s partner stations, such as MRS, for cheaper petrol.
The NNPC had called the shot, controlling largely how much Nigerians bought petrol as it was the sole importer of the product.
Experts say the $20 billion mega refinery has transformed Nigeria’s downstream sector.
A report by Energy Intelligence disclosed that the huge refinery broke NNPC’s tight grip on refining and product marketing in Nigeria and shifted Atlantic Basin petrol balances, pressuring European markets.
However, a twist emerged as a Punch report said some oil cartels were peeved by the refinery’s massive acceptance, which affected their business.
The halt in the naira-for-crude deal was a signal showing that the cartels may be back at work.
Naira-for-crude halt affects petrol prices
The six-month deal, which ended on March 31, 2025, resulted in another hike in petrol prices as Dangote announced that it is halting the sale of petroleum products in the local currency to marketers.
The result was immediate as filling stations hiked their pump prices, though crude oil prices also rose during the period.
Dangote cited foreign currency mismatch for the decision to sell its products in dollars instead of naira.
Experts allege sabotage
Analysts have said the move will pressure the naira and lead to an increase in goods and services.
“On the failure of the NNPC to renew the Naira for crude deal with Dangote, it reeks of sabotage.
“It makes no sense that NNPC will not prioritise domestic refineries with its crude sales. It's even a right of local refineries, including Dangote, to receive the 400,000 bpd crude oil supply allocated to Nigerian refineries in the PIA.
“So, the action of NNPC reinforces the allegation that some elements in the NNPC behind the bending plants in Malta will not relent in making Nigeria dependent on imported petrol.
“It swells their pockets at the expense of Nigerians who will have to pay more for petrol because this latest disruption in the Naira for crude deal will escalate prices.
This is especially because Dangote will now have to denominate his prices in dollars, which does not guarantee price stability since the Naira is the weaker currency in the exchange," Ishaya Ibrahim, a financial analyst, told Legit.ng.
Recently, the refinery and the NNPC hiked their prices to reflect market realities, but so much so as the naira-for-crude deal ended.
Source: UGC
Dangote Refinery to export petrol
Meanwhile, Legit.ng earlier reported that the Dangote Refinery agreed to export more than 200,000MT of its petrol, as local demand for more expensive, higher-quality products has disappointed many Nigerians.
An executive at the refinery disclosed this, saying that the mega refinery has signed its first export orders for its petrol and will begin dispatching the products immediately after the ships arrive.
The giant refinery has been touted as supplying Nigeria’s petrol demand and servicing about 340,000 barrels of the local market, ending the country’s dependence on petrol imports.
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Source: Legit.ng
