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Rasheed Sule makes a living repairing tires on the roadside in Nigeria’s largest city, Lagos. His air pump needs fuel, which is hard to find these days.
“Without fuel, we can’t work. We buy it from the black market, from 1,000 naira ($0.61/€0.55) to 1,500 naira per liter,” Sule told DW.
Nigeria is in a fuel crisis. Long lines at gas stations are a daily reality for consumers in Africa’s leading oil-producing nation.
“I’m supposed to be in the office right now, but I’m not, so I’ll be spending hours in line for fuel,” one driver told DW. We ended up with just two cars to buy fuel. ”
Nigeria has long been an importer of refined oil, and consumers have had to endure oil shortages and high prices.
So when a new refinery built by Aliko Dangote, Africa’s second-richest man, became operational in January, Nigerians had hope.
However, the shortages they had hoped for and the significant reduction in fuel prices did not materialize.
Nigerian consumers and trade unions regularly protest fuel shortages and price hikes Image: Abraham Achirga/REUTERS
Some analysts say the Dangote refinery alone will not be enough to alleviate the country’s fuel crisis.
Energy expert Omono Okonkwo said: “It is not enough to power the local refinery. It is not enough to power the Dangote refinery for example. This is what we are talking about now. ” he said.
There is not enough local crude oil
The $20 billion Dangote project is designed to process 650,000 barrels of Nigerian crude oil per day. However, as the country has struggled to secure enough crude oil domestically, it has had to rely on purchases from abroad.
“If we have 100% Nigerian crude, then yes, we will be fine, but we cannot wait because production can go up or down,” Dangote told Africa Report.
Financial expert Gbolahan Olohede said Dangote’s difficulties are part of Nigeria’s oil industry’s struggle to meet local demand.
“It’s hard to believe that 20 years ago, in 2005, our country was producing 2.5 million barrels a day. But today, Nigeria is struggling to produce 1.2 million barrels a day, which is only half of what it was before. .Nigeria is a large producer, but the fact is that our ability to meet our domestic needs has been hit hard,” Olohede said.
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Crude oil imports to supply the Dangote refinery will also affect prices, Okonkwo told DW. “They still have to import oil, and the price is set in dollars. So ultimately the business has to make a profit.”
Controversy over pricing
Dangote Refinery does not sell to oil marketing companies in Nigeria. Concerns over the price at which refineries sell refined crude oil are a major factor.
Dangote commanded 842.61 naira ($0.51) per liter in its first sale last week, taking the pump price in Lagos to 950.22 naira per liter, according to the state-run Nigerian National Petroleum Corporation (NNPC Ltd). However, the utilization rate at the pump was N855.
Dangote denied selling it to NNPC at 842.61 litres/litre, but did not reveal the actual price.
The government said it would not intervene.
Nigeria aims to lower fuel prices with new refinery
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However, Bayo Onanuga, Special Adviser to President Bola Tinubu, told the media that now that the fuel has been deregulated, both companies need to work independently in the deregulated market.
“The Premium Motor Spirit regime has been deregulated. Dangote is a private company. Remember that NNPC is a limited liability company. Whatever disputes the two companies have, it is their problem.” Onanuga said.
According to Onanuga, Nigerians could now benefit.
“If a price war starts, it is the consumers who benefit. If there is too much NNPC fuel, the people will go to the market and bring in the fuel at a price that they think is very reasonable and profitable for them. So, in my opinion, the answer is, as far as this is concerned, the government is staying out of this debate,” he told DW.
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Experts said the oil price and scarcity issue requires a comprehensive solution and the Dangote refinery is just one piece of the puzzle.
“Dangote refinery is a good initiative, but other participants, namely other refineries, Port Harcourt refinery, Warri refinery and other modular refineries, need to work towards price stability,” said Fuel Marketer. said Jeremiah Oratido.
“We have to allow licensed importers to flourish. There will be healthy competition and prices will come down.”
Editor: Benita van Eysen
Correction, October 5, 2024: A previous version of this article misspelled Omono Okonkwo’s name. DW apologizes for the mistake.
