In a significant policy shift, reports suggest the Federal Government is poised to grant Aliko Dangote’s refinery the authority to set the price of Premium Motor Spirit (PMS), commonly known as petrol. This move comes amidst a protracted fuel scarcity crisis that has left Nigerians grappling with high prices and limited availability.
On Tuesday, the Nigerian National Petroleum Company Limited (NNPCL) raised the pump price of PMS, adding to the mounting pressures faced by consumers. According to a Bloomberg report published on Thursday, the government is considering a new framework that would allow Dangote’s refinery to establish petrol prices starting next month.
“Starting in October, Nigeria will permit Dangote to set the price of gasoline for petroleum marketers,” Bloomberg reported. “Petrol marketers will then be able to purchase directly from the Dangote Refinery.”
Temitope Ajayi, Senior Special Assistant to the President for Communications and Publicity, emphasized to Bloomberg that Dangote’s refinery will adhere to market values. “Dangote Refinery will not sell their products below market value, as it operates as a profit-driven business. It’s unlikely that NNPC or the federal government will control the pricing of a private enterprise,” Ajayi stated.
Ajayi further noted that the role of the petroleum industry regulator will be crucial in ensuring product quality and fair pricing, to prevent the refinery from exploiting its position.
On Tuesday, Aliko Dangote, Chairman of Dangote Industries Limited, unveiled the first batch of fuel produced at his new refinery. Dangote expressed confidence that his facility would not only meet Nigeria’s needs but also cater to the broader Sub-Saharan Africa region. Additionally, he disclosed that the Federal Executive Council is devising a new pricing strategy for petrol produced at his refinery.
While this policy shift could lead to more market-driven pricing and address existing distortions, it also raises concerns about potential monopolistic practices. If Dangote’s refinery becomes the dominant or sole supplier of petrol in Nigeria, it could gain undue control over fuel prices, potentially driving costs higher for consumers and reducing competition in the market.
