•••list gains of deregulation, Naira-for-crude policy
Mike Odeh, Abuja.
Recent reports indicate that the price of Premium Motor Spirit (PMS), commonly known as petrol, may experience a significant decline in 2025. Industry experts, speaking to Saturday Sun, predict that petrol, currently priced between N900 and N950 at many fuel stations, could fall to as low as N500 per litre over the course of the year.
The anticipated price drop is attributed to a robust downstream sector, bolstered by the federal government’s deregulation policy. Key factors contributing to this potential decrease include a stable foreign exchange policy, intensified price competition, the Naira-for-crude initiative, and the expected operationalization of the Port Harcourt, Warri, and Dangote refineries. Stakeholders assert that allowing these refineries to sell their products in the domestic market and accept payments in naira will further drive prices down.
In July 2024, the Federal Executive Council (FEC) approved the sale of crude to local refineries with payments made in naira. Additionally, modular refineries are increasingly optimistic about the downstream sector, with plans to expand into petrol refining alongside their existing diesel production.
Currently, Nigeria’s daily petrol consumption stands at approximately 40 million litres, with local production contributing about 8.2 million litres. The Dangote Refinery alone produces around seven million litres, while NNPCL accounts for 1.2 million litres. Despite the presence of about 25 licensed modular refineries, only five are operational, primarily focusing on diesel.
As the Dangote Refinery produces approximately 30 million litres of petrol, it injects only seven million litres into the domestic market. In contrast, the newly operational Warri Refining and Petrochemical Company (WRPC) is currently running at 60% capacity, producing kerosene, diesel, and naphtha. Meanwhile, the Port Harcourt Refinery, which resumed operations over a month ago, is contributing 1.4 million litres of petrol to the market.
According to Mele Kyari, Group Chief Executive Officer of NNPC Ltd, the rehabilitation of the Port Harcourt Refinery 2 is nearing completion, while the Kaduna Refinery is also undergoing repairs. However, sources indicate that the Kaduna Refinery may not resume operations soon due to high costs and technical challenges.
Despite Kyari’s assertion that NNPC is no longer importing petrol, major marketers and some private depot owners continue to import approximately 30 million litres daily to address supply shortages.
In a recent interview, Ukadike Chinedu, National Publicity Secretary of the Independent Petroleum Marketers Association of Nigeria (IPMAN), expressed optimism about the impact of the Port Harcourt and Warri refineries on the downstream sector. He noted that the increased competition among suppliers has already led to price reductions from both NNPC and Dangote.
Chinedu believes that petrol prices could fall below N500 per litre in 2025 as more players enter the market and increase refining capacity. He also highlighted the positive effects of the federal government’s foreign exchange policy, which has seen the dollar exchange rate drop below N1,800, potentially leading to further price reductions as reliance on imports decreases.
The President of the Petroleum Products Retail Owners Association of Nigeria (PETROAN), Billy Harry, echoed these sentiments, asserting that the operationalization of the Port Harcourt and Warri refineries will provide more affordable fuel options for Nigerians. He noted significant price reductions from NNPC and Dangote, emphasizing that increased competition will likely result in further decreases in petrol prices.
Iche Idoko, Publicity Secretary of the Crude Oil Refiners Association of Nigeria (CORAN), also emphasized that the ongoing transition to a fully deregulated market will foster competition among suppliers, benefiting consumers through lower prices and improved product quality.
As local refining capacity continues to expand, the industry is poised for a positive shift, with refineries vying for consumer loyalty through competitive pricing and incentives.
