The Central Bank of Nigeria (CBN) has stated that the distribution of petroleum products from the Lagos-based Dangote Refinery will help lower transportation costs and ease food inflation.
CBN Governor Olayemi Cardoso made this announcement during a press briefing on Tuesday following the 297th meeting of the Monetary Policy Committee (MPC) in Abuja.
“The committee expressed optimism that the lifting of refined petroleum products from Dangote Refinery will moderate transportation costs and significantly support the easing of food price pressures in the short to medium term.
“This is also expected to moderate foreign exchange demands for importation of refined petroleum products with a positive spillover on external reserve and improvement in the overall balance of payment position,” Cardoso said.
Additionally, the CBN announced its decision to increase the Monetary Policy Rate (MPR) by 50 basis points, from 26.75% to 27.25%, in an effort to control inflation, which currently stands at 32.15%.
According to the National Bureau of Statistics (NBS), the headline inflation rate eased to 32.15% in August 2024, with food inflation recorded at 37.52% for the same month. The rise in food inflation, up 8.18% compared to August 2023, was driven by higher prices for items such as bread, maize, grains, cereals, yam, potatoes, and oils.
Cardoso said, “On food inflation, the upside risk remains flooding, hike in energy prices, scarcity of PMS, and most importantly, security in farming communities.
“Considering the weight of food in the CPI (consumer price index, which measures inflation) basket, (MPC) members recognise the efforts of the Federal Government in addressing insecurity in the farming community and stressed the need to remain steadfast.
“In addition, the MPC applauded the ongoing efforts of the Federal Government of Nigeria to bridge the supply deficit through duty-free import windows for food commodities.”
The Nigerian National Petroleum Company Limited (NNPCL) began lifting its first batch of petrol from the Dangote Refinery in mid-September, stating that it purchased the fuel at ₦898 per litre from the private refinery.
Prior to this, NNPCL retail outlets in Lagos sold petrol at approximately ₦855 per litre. However, it disclosed that Dangote-sourced petrol would retail for ₦950 per litre in Lagos and ₦1,019 in Borno.
In response, the Dangote Refinery denied selling petrol to NNPCL at ₦898 per litre. NNPCL maintained its position, urging the refinery to reveal its actual selling price and released a detailed pricing breakdown for Dangote-supplied petrol at its stations nationwide.
Meanwhile, the Independent Petroleum Marketers Association of Nigeria (IPMAN) expressed concerns, questioning the rationale behind selling locally refined petrol at a higher price than imported fuel.
Aliko Dangote, Africa’s foremost industrialist, began operations at his $20 billion facility in Lagos last December. The refinery, initially delayed by regulatory hurdles, currently has a capacity of 350,000 barrels per day and aims to reach 650,000 barrels per day by year-end.
The refinery has already started supplying diesel and aviation fuel to marketers, with petrol now added to the mix.
Nigeria, Africa’s most populous nation, continues to face significant energy challenges, as its state-owned refineries remain non-operational. The country relies heavily on imported refined petroleum products, with the state-run NNPCL being the primary importer.
Fuel shortages are frequent, and since the removal of fuel subsidies in May 2023, petrol prices have tripled, rising from around ₦200 per litre to over ₦1,000 per litre. This has worsened the difficulties faced by citizens, many of whom depend on petrol to power their vehicles and generators due to the country’s longstanding unreliable electricity supply.