NIPSS: Petrol Prices Expected to Drop to N750 as Dangote Refinery Comes Onboard

NIPSS

Nigerians may soon experience a reduction in the price of premium motor spirit, better known as petrol, as local refineries, including the Dangote Refinery, become fully operational. This optimistic outlook was shared by the Director-General of the National Institute for Policy and Strategic Studies (NIPSS), Ayo Omotayo, who believes that the move will significantly impact fuel prices in the coming months.

Before the removal of fuel subsidy by President Bola Tinubu, petrol sold for less than ₦200 per litre. However, since the subsidy removal, prices have soared to around ₦930 per litre, depending on location. The drastic increase has strained household incomes and raised concerns among Nigerians. But according to Omotayo, relief is on the horizon as domestic refining capacity improves.

Speaking on Channels Television’s The Morning Brief on Tuesday, Omotayo expressed confidence that the continued operation of local refineries would lead to a decline in fuel prices. “With the removal of the first subsidy, we have Dangote Refinery coming on. We have the other refineries. The refinery in Port Harcourt has worked continuously for 110 days if I’ve counted right! These are the short-term gains,” he stated.

He projected that petrol prices could drop to around ₦750 per litre before the end of the year if the current trajectory is maintained. Additionally, he noted that foreign exchange rates could stabilize, predicting a rate of 1.3 by the end of the year. “We’re looking at it coming down as low as ₦750 before the end of the year. And of course, foreign exchange, we believe, will still drop to about 1.3 before the end of the year, and it is going to continue like that as more of our refineries come into place. We will become a net exporter in the long run,” Omotayo added.

His comments come amid widespread public concern about the rising cost of living since the removal of the fuel subsidy. Many Nigerians have had to adjust their spending habits as transportation and goods prices surged. The subsidy removal was part of President Tinubu’s economic reforms, aimed at reducing the financial burden on the government.

For years, Nigeria relied on an expensive arrangement where crude oil was exchanged for refined petrol, which the government then subsidized for the domestic market. This practice drained government revenue, depleted foreign exchange reserves, and contributed to mounting national debt. During his campaign, Tinubu vowed to end the costly subsidy program, and upon assuming office, he declared, “fuel subsidy is gone.”

The sudden policy shift led to initial panic and a sharp increase in petrol prices, further exacerbating economic difficulties for many Nigerians. However, Omotayo believes that the subsidy removal was a necessary decision to prevent national economic collapse. He emphasized that, while the effects have been challenging, the long-term benefits will outweigh the current hardships.

“So for us at the National Institute, it was a very timely step that Mr President took, and it has come a long way in saving Nigeria,” he said. “We were on the verge of collapse with subsidies. The subsidies we were paying were just totally unimaginable, and of course, we were subsidizing fuel as far as Burkina Faso, as far as Sierra Leone in some instances. So a government that wants to succeed must take very tough decisions. For us at the National Institute, we commend the President for the removal of fuel subsidy, even though the Nigerian politic may feel it is harsh, that we needed some more time.”

Omotayo’s remarks highlight the expectation that as domestic refining capacity increases, Nigeria will move towards becoming self-sufficient in fuel production. The operation of the Dangote Refinery, along with other refineries, is seen as a crucial step toward achieving energy security and reducing dependence on imported fuel.

The NIPSS DG acknowledged the current struggles faced by Nigerians but reassured the public that the economic sacrifices being made today will eventually yield positive results. With more refineries coming online and increased local production, the long-term vision is for Nigeria to become a net exporter of refined petroleum products, thereby stabilizing prices and improving economic conditions.