Dangote Defends Petrol Price Hikes as Pump Prices Near N1,400 Amid Crude Cost Controversy

Dangote Defends Petrol Price Hikes as Pump Prices Near N1,400 Amid Crude Cost Controversy

Refinery explains time lag between crude purchase and finished product pricing as marketers warn of business uncertainty

The Dangote Petroleum Refinery has strongly defended its recent series of petrol price increases, attributing the upward adjustments to the high cost of crude oil purchased weeks and months earlier, as well as the lengthy and complex process involved in securing, shipping and delivering crude to the refinery. The explanation comes as the price of Premium Motor Spirit (PMS) — commonly known as petrol — continues to climb across Nigeria, with the product now selling between N1,310 and N1,400 per litre, depending on the location and distance from supply depots.

In Lagos and Ogun states, petrol is currently retailing at about N1,310 per litre, while consumers in northern states and other regions farther from the coastal refinery are paying N1,350 or more. In some remote locations, the price is approaching N1,400 per litre, reflecting the high cost of transportation and logistics involved in distributing the product across the country’s vast geography.

The latest round of increases followed the refinery’s decision to raise its gantry price — the price at which marketers purchase the product directly from the refinery — by N65 per litre, from N1,200 to N1,265, effective August 29, 2026. This marked the third price hike announced by the refinery in just eight days, bringing the total adjustment to N100 per litre since August 21, representing an increase of approximately 8.6 per cent. The refinery first increased its gantry price from N1,165 to N1,185 per litre on August 21. Five days later, it raised the price by another N15 to N1,200 per litre, effective August 26. On Saturday, August 29, it announced the latest N65 increase, taking the price to N1,265 per litre. The cumulative effect has pushed the refinery’s coastal PMS price from N1,582,380 to N1,669,545 per metric tonne.

Critics have been quick to point out that these price hikes occurred even as global crude prices were experiencing a decline. Brent crude closed at $88 per barrel on Friday, representing a 5 per cent drop from earlier levels, despite ongoing geopolitical tensions between Iran and the United States. However, a senior executive of the Dangote refinery, who spoke with The PUNCH on condition of anonymity because he was not authorised to speak publicly on the matter, explained that the prevailing international crude price could not be used as the sole basis for determining the cost of petrol being produced from crude already purchased by the refinery.

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The executive outlined the extensive timeline involved in crude procurement, asking a series of rhetorical questions to illustrate the point: “If you want to buy crude at today’s price, when do you think you will complete the actual transaction to purchase the crude? When will you get a laycan? When can you get a ship chartered and a charter party agreement signed? When will the ship go to load the crude and secure the laycan for discharge? When is the sailing time before the crude eventually gets into your tank?” He further questioned how the refinery would account for large volumes of crude purchased earlier when prices were higher, adding, “And what will happen to the huge quantities of expensive crude that you bought long ago and stored in the tanks? These are the factors determining the change in prices, not an immediate crude price change.”

The refinery’s position is supported by data revealing the scale of its crude procurement operations. The company recently disclosed that it spent $4.48 billion importing crude** over a two-month period, with **40.40 million barrels of crude** imported between May and June 2026. The refinery explained that crude purchases are typically made weeks or months in advance under contracts linked to **monthly average prices** rather than spot market rates. According to records, the refinery imported 21.47 million barrels of crude in May at a landed cost of $2.68 billion, before bringing in another 18.93 million barrels worth $1.80 billion in June. The average landed cost of crude fell from **$124.80 per barrel in May to $95.25 per barrel in June, reflecting softer global crude prices, lower freight costs and changes in the mix of crude grades purchased. Despite this decline, the refinery noted that both monthly averages remained well above the current international benchmark, meaning much of the fuel currently being supplied was produced from more expensive crude inventories.

Energy experts have weighed in on the pricing debate, backing Dangote’s position. Energy analyst Dan Kunle argued that fluctuations in global crude oil prices, inventory costs and market realities make it impossible for petrol prices to fall immediately whenever international oil prices decline. He explained, “The crude cargoes delivered in May and June were ordered and paid for as far back as February and March. In international crude marketing, you cannot take delivery immediately. It takes about one to one-and-a-half months before the cargo arrives, meaning you have inventory on the high seas, inventory in storage and inventory feeding into the refinery.” Kunle added that several operational expenses significantly increase refining costs, with freight, handling charges, demurrage and delays at Nigerian export terminals all contributing to the final price.

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The issue is particularly significant for Dangote because the refinery does not rely entirely on Nigerian crude. Reports indicate that between 30 and 40 per cent of the refinery’s crude feedstock is being imported. According to the Nigerian Midstream Downstream Petroleum Regulatory Authority (NMDPRA) , oil producers in Nigeria supplied about 80 per cent of the crude oil processed by domestic refineries, while refiners imported about 20 per cent between January and July this year. The refinery sources crude from across Africa and beyond, purchasing Nigerian grades such as Bonny Light, Qua Iboe, Escravos, Forcados, Amenam and Agbami alongside international blends including Libya’s El Sharara, Angola’s Cabinda and other regional grades. The refinery also recently imported crude from the United Arab Emirates for the first time, highlighting its growing flexibility in securing feedstock as global supply patterns evolve.

The refinery has also stated that it deliberately absorbed part of the higher crude procurement costs instead of passing them entirely to consumers, arguing that doing so helped cushion inflationary pressures and improve price stability in Nigeria’s downstream market. It also said domestic refining has strengthened Nigeria’s energy security by reducing dependence on imported petroleum products and easing pressure on the country’s foreign exchange reserves. Looking ahead, the company said consumers could benefit from further reductions in fuel prices as cheaper crude purchased in recent weeks gradually replaces higher-cost inventories, provided global oil market conditions remain supportive.

The latest price hikes have, however, heightened concerns among petroleum marketers, who have warned that the volatility is making it difficult to plan their businesses. The National Publicity Secretary of the Independent Petroleum Marketers Association of Nigeria (IPMAN) , Chinedu Ukadike, said marketers were dealing with several factors that could push up the cost of petrol. “We are facing the challenges of the volatility in the market. There are policies of the government, policies of the international market, and exchange rates. These are inherent dispositions to the increase in pump prices. We are not refiners to be able to determine the price of petroleum products.” He, however, acknowledged that Dangote had previously reduced its petrol price in response to movements in the international market. “But, I also believe that Dangote has been consistent in terms of reducing its price in line with the international market rate. With this situation now, we cannot, at this particular point in time, structure our business. It’s going to be too difficult for us to structure our business.”

Ukadike also warned that continued tensions between Iran and the United States could worsen price irregularities. “The more the Iran and United States crisis continues to persist, the more we’ll be having these irregularities in price,” he added. The IPMAN official said the price fluctuations were already being reflected in the cost of petrol across the country. “Also, bear in mind that the price of crude oil is determined by the international market. So, for all the independent marketers, we will continue to strive. Prices have been fluctuating, and we are still loading. The price of petrol will continue to be volatile as long as the price of crude is not stable and other factors relating to the financial situation.”

The impact of the latest adjustment is already being felt in the retail market, with petrol now selling at about N1,310 per litre in Lagos and Ogun and N1,350 or more in parts of the North and other distant markets. In some locations, the product is approaching N1,400 per litre. The difference in pump prices across locations is partly linked to the cost of moving petrol from the coastal refinery and depots to distant markets, with transportation and other distribution expenses adding to the cost of the product. This is one of the reasons the Dangote refinery plans to extend its free distribution scheme across the country. IPMAN has welcomed Dangote’s decision to deliver petroleum products free to states such as Imo and Anambra, but urged the company to extend the programme to northern states to achieve uniform pump prices and ease widespread operational strain.

Data contained in the Major Energies Marketers Association of Nigeria’s Energy Bulletin for August 27 showed Dangote Refinery’s PMS gantry price at N1,200 per litre on August 27, with the estimated spot import-parity price of petrol into tanks standing at N1,222.32 per litre, meaning Dangote’s N1,200 gantry price was N22.32 below the spot import-parity estimate. However, two days later, the refinery raised its gantry price to N1,265 per litre, putting the new price N42.68 above the August 27 spot import-parity estimate. The crude market has remained volatile amid geopolitical tensions involving Iran and the United States and uncertainty over crude flows through the Strait of Hormuz.

The latest development comes amid renewed volatility in the global oil market, with the ongoing United States-Iran conflict adding to uncertainty in the international energy market. This is also coming at a time when the presidential candidate of the African Democratic Congress, former Vice President Atiku Abubakar, said he would reintroduce fuel subsidies to reduce hardship and the cost of living. Ukadike said marketers and consumers were ultimately bearing the consequences of the price movements, and the frequent changes in the cost of petrol were creating uncertainty for marketers and consumers, as the cost of replacing products could change substantially within a short period.

Dangote Defends Petrol Price Hikes as Pump Prices Near N1,400 Amid Crude Cost Controversy