Oil and gas expert Henry Adigun has pointed to production costs in US dollars as a key factor why the $20 billion Dangote Refinery in Lagos may not be able to sell Premium Motor Spirit (PMS), commonly known as petrol, below the new pump price set by the Nigerian National Petroleum Company Limited (NNPCL).
During an appearance on *Inside Sources* with Laolu Akande, a socio-political program on Channels Television, Adigun explained that the high-quality petrol produced by the Dangote Refinery commands a premium price due to its superior quality. He emphasized that fuel is a dollar-denominated business, and billionaire refinery owner Aliko Dangote should have the flexibility to set his own prices.
“He (Dangote) incurs costs. He only receives 40% of the crude from NNPC and must purchase the rest from other sources, including the U.S.,” Adigun said, explaining that the refinery cannot rely on a single type of crude and must blend Nigerian and American crude. “Even if Nigeria supplies all the barrels, he would still need to import and blend them.”
Adigun also highlighted that Dangote took loans in US dollars, meaning his repayment obligations are also dollar-based.
When asked if Dangote could sell petrol at ₦700 per litre, Adigun was skeptical, stating, “He cannot. After calculating the refinery’s costs, I told his team there’s no way petrol can be priced below ₦850, factoring in retail costs as well.”
Nigeria, Africa’s most populous country, continues to grapple with energy challenges, as its state-owned refineries remain non-functional. The nation relies heavily on imported petroleum products, with NNPCL as the major importer. Since the removal of fuel subsidies in May 2023, petrol prices have surged from around ₦200 to nearly ₦800 per litre, worsening the hardship faced by citizens who depend on petrol for transportation and electricity generation.
Dangote’s $20 billion refinery, which began operations in December 2022, currently processes 350,000 barrels of oil per day and aims to reach its full capacity of 650,000 barrels per day by the end of the year. The refinery has already started supplying diesel and aviation fuel and is preparing to introduce petrol to the market, pending final arrangements with NNPCL. NNPCL has stated that it expects to start lifting fuel from the Dangote Refinery by mid-September.