In the bustling streets of Lagos, Rasheed Sule, a tire repairman, reflects the struggles of everyday Nigerians amid a severe fuel crisis.
“If there isn’t any fuel, we won’t be able to work. We buy from the black market where a liter costs between 1,000 naira ($0.61/€0.55) and 1,500 naira,” Sule told DW, highlighting the dire conditions affecting small businesses reliant on fuel.
In a country blessed with abundant oil reserves, long queues at gas stations have become a routine sight, painting a grim picture of the realities for consumers in Africa’s leading oil-producing nation.
“I’m supposed to be in the office now. I’m not in the office. So, I will spend hours…queueing for fuel,” lamented one motorist. “I just left a filling station now. We were just two vehicles to buy fuel and it finished.” This frustration encapsulates the daily struggles faced by millions as Nigeria grapples with a chronic fuel shortage.
A History of Dependence
Nigeria has long relied on imported refined oil, resulting in chronic shortages and escalating prices for consumers.
The anticipation surrounding the opening of the Dangote refinery, built by Aliko Dangote—Africa’s second-richest person—was high when it began operations in January. Many Nigerians hoped this new facility would finally end fuel shortages and lead to significant price cuts.
However, these hopes have been dashed as the refinery has struggled to provide enough fuel to meet local demand. Analysts suggest that the Dangote refinery alone cannot resolve the country’s deep-rooted fuel crisis.
Energy expert Omono Okonkwo explains, “It’s not enough to feed our local refineries. It’s not enough to feed Dangote refinery for instance, which is what we are talking about right now.”
Challenges in Local Crude Supply
The $20 billion Dangote project is designed to process an impressive 650,000 barrels of Nigerian crude oil per day. Yet, the refinery has faced significant hurdles in securing sufficient crude oil locally and has resorted to sourcing from outside the country.
“If we have 100% Nigeria’s crude, yes, fine but we can’t wait because sometimes the production is up and down,” Dangote stated in an interview with The Africa Report magazine.
Despite Nigeria’s status as a major oil producer, the country has seen its output decline sharply over the past two decades.
Gbolahan Olojede, a finance expert, emphasizes the severity of this decline, noting, “It’s unbelievable that 20 years ago, in 2005, we were able to do as much as 2.5 million barrels per day. But today, Nigeria is struggling to do 1.2 million, which is barely half of what we used to do.”
This stark reality highlights the systemic issues within Nigeria’s oil industry, which continues to falter in meeting local demand.
Importing Crude Oil
The necessity for Dangote to import crude oil to keep the refinery operational will likely affect pricing for consumers as well.
“They still have to import crude and that is priced in dollars. So, at the end of the day, they need to turn out a profit in their business,” Okonkwo explained, illustrating the complex dynamics of the fuel market.
The controversy over pricing at the Dangote refinery has further complicated the situation. Reports indicate that Dangote’s initial sale to the Nigerian National Petroleum Company Limited (NNPC Ltd) was priced at N842.61/liter ($0.51), which would result in a pump price of N950.22/liter in Lagos.
In contrast, the prevailing pump price was around N855. Despite denying the reported price, Dangote has not disclosed the actual figures, leaving consumers and stakeholders uncertain.
Government Stance on Deregulation
Amid the crisis, the Nigerian government has opted not to intervene directly in the pricing dispute between Dangote and NNPC. Bayo Onanuga, a special adviser to President Bola Tinubu, reaffirmed the government’s position, stating that since fuel prices have been deregulated, companies must operate independently in a market-driven environment.
“The Premium Motor Spirit regime has been deregulated. Dangote is a private company. NNPC should not forget it’s a limited liability company,” Onanuga said, suggesting that competition in the market could eventually benefit consumers.
While Onanuga remains optimistic, stating that “the consumer who benefits if a price war starts,” experts caution that the crisis requires comprehensive solutions beyond just the Dangote refinery.
“Dangote refinery is a good initiative but other players, I mean, other refineries, the Port Harcourt refinery, the Warri refinery, and other modular refineries must work for prices to be stabilized,” said Jeremiah Olatide, a fuel marketer.
The Need for Healthy Competition
To effectively address the fuel crisis, stakeholders emphasize the need for healthy competition among local refineries.
Olatide argues that “licensed importers must be allowed to thrive” in order to create an environment where prices can stabilize, providing consumers with better options and potentially lowering costs.
As Nigerians navigate the tumultuous fuel landscape, the road ahead remains uncertain. With growing protests over fuel shortages and escalating prices, the government’s commitment to a deregulated market will be tested in the coming months.
The hope is that as more refineries come online and competition increases, the citizens of Nigeria will finally see relief from the daily challenges of fuel scarcity and high costs.
For now, Rasheed Sule and countless others continue to wait in long lines, praying for a swift resolution to a crisis that has become all too familiar in Nigeria—a country rich in oil but struggling to provide its citizens with the basic fuel they need to thrive.
