Giant oil refinery in Nigeria fails to prevent record gasoline prices

Fuel prices in oil-producing Nigeria have reached record-high levels, industry figures show, as maximum output from the giant Dangote Petroleum Refinery has failed to shield ​the country from the energy market impact of war in the Middle East.

The 650,000 barrels-per-day refinery, Africa's largest, became fully operational early this year. It was designed to ‌transform Nigeria into a major exporter of refined products after decades of inadequate refinery capacity. In the past, that repeatedly led to fuel shortages but government subsidies kept pump prices low.

President Bola Tinubu removed this buffer when he took office in 2023, promising reforms that earned plaudits from international investors.

Now Nigerians face the shock of a 65% price spike - the largest among major African economies as the impact of the new refinery has been blunted by the need to import ​large volumes of expensive crude from abroad, even though Nigeria is Africa's biggest oil producer.

INTERNATIONAL OIL MAJORS TAKE THEIR SHARE

The constraint stems from Nigeria’s financing model: state oil firm the ​Nigerian National Petroleum Company Limited’s joint‑venture crude is tied to oil-backed loans and pre‑export deals.

That means much of Nigeria's roughly 1.5 million barrels-per-day of production goes ⁠to paying debts to international oil majors, banks and traders. The NNPC does not disclose its obligations, but analysts estimate they amount to about 400,000 bpd.

David Bird, managing director at Dangote, told local ​TV that the company can only source about five crude cargoes a month locally, far short of the 13–15 required. It has to import the rest at prices dictated by the impact of the Middle ​Eastern war. For Nigeria the size of a cargo is typically around a million barrels.

The difficulty is compounded because Nigeria does not have a strategic fuel reserve and the government has yet to begin action to set one up.

"A strategic reserve would have shielded Nigeria somewhat from the inflationary effects of price spikes and keep refineries supplied during prolonged disruptions," Mikolaj Judson, an analyst at advisory company Control Risks, said.

IRAN WAR CAUSES UNPRECEDENTED SUPPLY DISRUPTION

The energy supply disruptions ​that have followed U.S.-Israeli attacks on Iran, which began at the end of February, are unprecedented. As a result of the conflict, shipment through the Strait of Hormuz, a route for about one-fifth of ​global energy supplies, is effectively closed for commercial shipping.

International oil prices have leapt to well above $100 a barrel, roughly 50% higher than before the war began, boosting the profits of many energy majors, while governments and ordinary ‌consumers grapple with ⁠the risk of a surge in inflation.

In Nigeria, pump prices have risen by 65%, more than elsewhere in the region, where government price controls have limited the rise.

Between March 2 and March 21, fuel prices rose by about 10–17% in Ghana, were unchanged in Kenya due to price controls, and increased by around 1% in South Africa, according to industry and regulatory pricing data.

INFLATION IS REIGNITED AFTER IT HAD BEGUN TO COOL

In Nigeria, inflation had begun to ease after reaching a record high last year, but since the start of the war, the cost of transport and some food items has doubled.

“We are already feeling it ​in Nigeria,” said Salau Sodiq, a 25‑year‑old frozen-food-seller ​in Lagos. "The prices of fish and chicken have ⁠doubled, customers are complaining, sales are falling, and it’s becoming harder for us to buy the volumes we need."

Ride‑hailing drivers in Lagos last week staged protests.

Nigeria's unreliable grid means many others are also exposed to expensive refined products as businesses and households rely on gasoline and diesel to power generators.

INCREASED VOLUMES DOMESTICALLY ​AND ALSO ABROAD

Dangote has raised gasoline supplies to Nigeria’s domestic market this month, even as it met growing demand from across Africa.

It sets its fuel ​prices in line with international ⁠fuel and crude benchmarks, factoring in freight and insurance costs.

The result was it raised its wholesale price by about 61% between early and late March, meaning customers are paying around 1,400 naira ($1.02) per litre in Lagos and Abuja, the highest Nigerians have ever paid.

After meeting Tinubu last week, Aliko Dangote, president of Dangote Group, said the conflict in the Middle East would worsen economic hardship across Africa unless it was urgently resolved.

Businesses and ⁠labour unions have ​called on the government for emergency relief, including tax incentives for refiners, more naira‑based crude supply and temporary cushioning measures, ​while accelerating longer‑term energy reforms.

In southern Oyo State, the governor approved a 10,000‑naira transportation allowance for state government workers, to run for three months from April, to help offset rising fuel prices.

But Wale Edun, Nigeria's finance minister, said the government will not ​interfere with an "orderly market pricing system", preferring instead to focus on ways of helping people to adapt.
($1 = 1,377.8300 naira)

By Isaac Anyaogu, Reuters

Gunmen kill at least 20 in nighttime attack in Nigeria

A night attack on a community in Nigeria ’s north-central region left at least 20 people dead, residents and authorities said.

The attack occurred on Sunday night in Gari Ya Waye community in the Jos North area of Plateau state, Joyce Lohya Ramnap, the state commissioner for information, said in a statement. She did not give the number of casualties, but said there was “loss of lives” and injured.

The state government imposed a 48-hour curfew to prevent further attacks, Ramnap said.

No group has claimed responsibility but residents told The Associated Press that many gunmen on bikes shot sporadically into the community.

Ibukun Falodun, a resident, said that 20 people were confirmed dead.

Attacks in Plateau State are part of a long-running cycle of violence in north-central Nigeria, where disputes over land and grazing between mostly Muslim Fulani herders and largely Christian farming communities frequently escalate into deadly clashes. Criminal gangs are also active.

AP

Semiconductor shortages reshape tech use in Nigeria

Global demand for AI is straining semiconductor supplies, driving up prices for smartphones, laptops, and smart devices. In Nigeria, this is already altering how people buy and use mobile technology.

CGTN Africa

Middle East war drives more buyers to seek Nigeria’s liquefied natural gas exports

Nigeria is experiencing rising demand for its liquefied natural gas (LNG) cargoes as disruptions from the Middle East conflict create new commercial opportunities for the West African producer.

Buyers are increasingly turning to Nigeria due to its proximity to major consuming markets and the scale of its gas reserves, according to NNPC Executive Vice President Olalekan Ogunleye.

Nigeria LNG (NLNG), in which NNPC is the largest shareholder, has an export capacity of up to 22 million metric tons per year and is currently building a seventh production train expected to be completed in 2027, Reuters reported.

“We are right in the middle of the market. We are 10 sailing days from Europe, close to the Atlantic Basin and close to Asia,” Ogunleye said. “We see commercial opportunities, especially given that we have the largest gas reserves in Africa.”

Ogunleye noted that global demand for natural gas remains resilient and is unlikely to be derailed by ongoing geopolitical tensions.

He added that NNPC has begun discussions on adding two new LNG trains and is also advancing a 12 million metric tons per annum (mtpa) LNG project, alongside gas-based industrial hubs, to unlock more than 200 trillion cubic feet of reserves in Nigeria.

Global Shift Drives Interest in African Gas

Martin Houston, an LNG developer and consultant, said the U.S.-Israeli conflict with Iran has intensified the need for buyers to diversify supply sources.

He noted that countries in Africa and South America with proven gas reserves but limited market access could benefit from the growing interest in new LNG supply, including floating LNG solutions.

This trend is already playing out across Africa. Business Insider Africa earlier reported that Italy is seeking to increase gas imports from Algeria—Africa’s largest gas producer and exporter—after both countries agreed to deepen energy cooperation.

Spain is also considering boosting pipeline imports from Algeria as it looks to shore up supplies amid rising prices driven by the war in the Middle East.

By Adekunle Agbetiloye, Business Insider Africa

Nigeria eases FX rules, lets oil firms retain full export proceeds

Nigeria's central bank has removed a requirement that forced international oil companies to temporarily retain part of their export earnings, allowing them ​to repatriate all proceeds in a move aimed at improving liquidity and ‌confidence in the foreign exchange market.

In a circular dated March 25, the central bank said it had scrapped earlier "cash pooling" requirements that allowed authorised dealer banks to transfer only half of ​oil export proceeds immediately, with the balance held for up to 90 ​days.

Under the new directive, oil companies may repatriate all export earnings ⁠through authorised banks, subject to documentation and monthly reporting, with immediate effect.

The move ​signals further liberalisation of Nigeria’s foreign exchange regime for oil exporters, a key source ​of dollar inflows, though it is unlikely to produce an immediate jump in supply.

The central bank said the move was part of ongoing reforms to “further liberalise and deepen the market in ​line with current market realities,” as it works to stabilise the naira currency ​and attract investment.

For international oil companies, the reform restores greater control over cash-flow management, allowing firms ‌to ⁠decide when and how to deploy export earnings without mandatory holding periods.

Industry executives say freer access to dollar revenues improves treasury efficiency and marginally lowers financial risk in Nigeria’s upstream sector, where confidence over capital mobility remains key.

The change reverses a restriction ​imposed in February 2024 ​amid acute dollar ⁠shortages that pushed the naira to record lows. At that time, the central bank capped immediate transfers of oil export proceeds ​at 50%, with the remainder held locally for 90 days ​in a ⁠bid to shore up dollar liquidity.

That earlier measure formed part of a broader package of reforms following years of foreign exchange strain linked to low oil prices and ⁠the ​COVID-19 shock.

Since then, the central bank has also raised ​open-market rates to attract investors and scrapped caps on foreign-exchange spreads in the interbank market as it ​unwinds controls introduced during periods of stress.

By Isaac Anyaogu, Reuters