Emmanuel OchayiIn recent months, Nigerians have experienced a notable decline in petrol prices, a welcome change in a country where fuel costs have long been a contentious issue. This reduction is largely attributed to increased local refining capacity and competitive market dynamics.
However, the critical question remains: Are these lower prices here to stay, or are Nigerians being set up for another price hike? This article focuses on the sustainability of the current price reductions, examining whether they offer genuine relief or merely a temporary respite before future increases.
Join our WhatsApp ChannelThe Current Landscape of Petrol Prices in Nigeria
As of February 2025, petrol prices in Nigeria have seen a significant decrease. The Dangote Petroleum Refinery, a key player in the industry, reduced its ex-depot price of Premium Motor Spirit (PMS) to ₦825 per litre, down from ₦890 per litre, effective march 1, 2025 as reported by Prime Business Africa. This move was aimed at delivering tangible benefits to marketers and consumers alike.
READ ALSO: Why Petrol Price Reduction Will Continue Until June – Rewane
Following suit, the Nigerian National Petroleum Company Limited (NNPCL) adjusted its pump price to ₦860 per litre across its stations in Lagos State.
Expert Insights on the Sustainability of Petrol Prices
An Economist, Bismarck Rewane, Managing Director of Financial Derivatives Company Limited, predicts that the downward trend in petrol prices will continue until June 2025. He attributes this decline to market competition and production efficiencies. Rewane notes, “Between now and June, we will see prices begin to decline. But after June, as things stabilise, depending on what happens in the global oil and currency market, we might begin to see some stabilisation.”
The NESG-Stanbic IBTC Business Confidence Monitor report projects a significant drop in Nigeria’s headline inflation rate to 27.1% by the end of 2025. This prediction hinges on expectations that petrol pump prices will stabilize over the year as market forces play out. The report states, “We expect headline inflation to remain above 30% till September before dropping below 30% and down to 27.1% by December 2025.”
Local Refining Capacity and Its Impact on Petrol Prices
The resurgence of Nigeria’s local refining capabilities plays a pivotal role in the current price dynamics. The Port Harcourt and Warri refineries, alongside the privately-owned Dangote Refinery, are injecting much-needed supply into the market. This increase in local production is expected to reduce reliance on imports and contribute to lower petrol prices. Industry experts predict that petrol, which currently sells for between ₦900 and ₦950 per litre at many fuel stations, may see its price further dropping to as low as ₦500 per litre during the year.
Market Competition and Consumer Benefits
The competition between major players like Dangote Refinery and NNPCL is expected to benefit consumers in the short run.
Rewane observes, “In a price war, nobody wins; the consumers win in the short run, and then eventually, the market goes back to where it should be.” This competitive environment has led to price reductions, offering temporary relief to consumers.
Global Oil Market and Currency Exchange Rates
The global oil market and currency exchange rates significantly influence local petrol prices. Data suggests that falling petrol prices, which started in November 2024, are a result of the naira’s appreciation by 9.87% between December and February. Additionally, global crude oil prices have been relatively stable during this period.
However, these factors are subject to change, and any volatility could impact the sustainability of current petrol prices.
Perspectives from Nigerian Citizens
To understand the public sentiment, we spoke with several Nigerian citizens about the recent petrol price reductions.
Wasiu Lamidi, a Lagos-based commercial driver, expressed cautious optimism: “It’s good that prices are coming down, but we’ve seen this before. I hope it’s not just for a short time. I will only be happy when we start buying petrol below N500”
Mary Akarule, a small business owner in Ajao Estate, Lagos, shared her concerns: “Lower petrol prices help my business reduce costs, but I’m worried they might go up again suddenly.”
Osapolor Monday, a university student, highlighted the broader impact: “Affordable petrol means I can travel home more often. It’s a relief, but I hope it lasts.”
Expert Opinions on Future Petrol Price Trends
Industry experts provided their insights on the potential future of petrol prices in Nigeria. Dr. Olufemi Adesina, an energy economist, stated, “The current price reduction is a positive development, but sustaining it will depend on consistent local production and stable global oil prices.”
Ms. Funke Adeoye, a financial analyst, noted, “While consumers are benefiting now, any disruptions in local refining or global markets could lead to price hikes.”
Mr. Musa Ibrahim, a policy analyst, added, “Government policies and currency stability are crucial. Without proper management, these low prices might not be sustainable.”
Assessing the Sustainability of Petrol Prices
The recent reductions in petrol prices in Nigeria offer a welcome respite for consumers and businesses alike. Factors such as increased local refining capacity, market competition, a stronger naira, and stable global oil prices have contributed to this decline. However, the sustainability of these lower prices remains uncertain.
Variables including global market fluctuations, currency stability, and the operational efficiency of local refineries will play pivotal roles in determining whether Nigerians can continue to enjoy affordable petrol or face another price hike in the near future.
As the situation evolves, it is essential for stakeholders, including the government, industry players, and consumers, to remain vigilant and proactive in addressing potential challenges to maintain stable and affordable petrol prices in Nigeria.
Emmanuel Ochayi is a journalist. He is a graduate of the University of Lagos, School of first choice and the nations pride. Emmanuel is keen on exploring writing angles in different areas, including Business, climate change, politics, Education, and others.
