Dangote Refinery Quietly Subsidising Petrol, Diesel Amid Oil Price Surge

Fresh indications emerged on Monday that the Dangote Group is quietly absorbing part of the rising cost of fuel in Nigeria as global crude oil prices continue to climb following escalating tensions in the Middle East.

Senior officials within the company disclosed that the Dangote Petroleum Refinery has been selling petrol and diesel below prevailing market rates in an effort to cushion the impact of soaring international crude prices on Nigerians.

According to a top management source familiar with the refinery’s pricing operations, the refinery’s current ex-depot petrol price of about N1,200 per litre does not fully reflect the actual market value of the product under current global conditions.

The official, who spoke on condition of anonymity because he was not authorised to comment publicly, said the company had been “optimising” prices of Premium Motor Spirit and diesel despite mounting production costs triggered by the ongoing United States-Iran crisis.

The conflict has rattled global energy markets, especially after Iran reportedly disrupted activities around the Strait of Hormuz, one of the world’s most strategic oil shipping routes. The development pushed Brent crude prices from about $66 per barrel earlier in the year to above $100 per barrel, leading to fresh pressure on fuel-importing economies such as Nigeria.

The increase has already affected fuel prices across the country. Petrol prices at Dangote’s loading gantry reportedly rose from about N774 per litre to N1,200, while diesel and aviation fuel also recorded sharp increases.

Despite the adjustments, insiders at the refinery insist the company is still shouldering part of the burden to prevent even higher pump prices.

“With crude prices moving sharply upward, we have tried to minimise the impact on Nigerians as much as possible,” one source said, explaining that the refinery had prioritised price moderation for petrol and diesel because of their wider impact on transportation, electricity generation and industrial activities.

However, the source clarified that the refinery could not extend the same level of price support to aviation fuel due to the scale of global price increases.

Nigeria’s aviation industry has been among the sectors hardest hit by the latest energy crisis. Airlines have warned that the dramatic rise in the cost of Jet A-1 fuel could disrupt flight operations nationwide if the trend continues.

The Vice President of the Airline Operators of Nigeria, Allen Onyema, recently disclosed that aviation fuel prices surged from around N900 per litre before the Iran crisis to as high as N2,700 and N2,900 in some locations, with certain marketers reportedly selling above N3,500 per litre.

Industry analysts say the development threatens the financial stability of domestic carriers already battling high operating costs, foreign exchange volatility and maintenance expenses.

Another official within the Dangote Group revealed that the refinery currently supplies aviation fuel to marketers at below N2,000 per litre, significantly lower than prevailing market prices being passed on to airlines.

According to the official, the refinery’s jet fuel price stood at approximately N1,799 per litre as of Monday morning, adding that marketers ultimately determine the retail prices sold to airline operators.

The $20 billion Dangote refinery, located in the Lekki Free Trade Zone in Lagos, is regarded as Africa’s largest single-train refinery and a major component of Nigeria’s drive toward energy self-sufficiency. Since commencing fuel supply operations, the facility has played a growing role in stabilising local fuel availability and reducing dependence on imported petroleum products.

Energy experts say the refinery’s pricing strategy may provide temporary relief for consumers, but sustained global crude price increases could eventually force broader adjustments across the downstream oil sector.