Dangote Refinery Buys Nigerian Crude at International Prices, Fuel Costs Remain High
The Managing Director and CEO of Dangote Petroleum Refinery, David Bird, has explained why Nigerian fuel prices are unlikely to drop, even as the refinery runs at full capacity. Speaking to the media on Monday, Bird highlighted the extreme volatility in global oil markets and the refinery’s direct exposure to international commodity prices.
Bird revealed that about 30 to 35 percent of the refinery’s crude comes from Nigerian sources, while the remainder is purchased from the open market in US dollars, often through multiple traders. He stressed that all crude, including that under the government’s Crude-for-Naira programme, is bought at international benchmark prices. “We then pay international freight and insurance rates to bring that crude to the refinery,” he said, explaining why costs remain high despite domestic sourcing.
The CEO further noted that Dangote Refinery processes a wide variety of crude types, including West Texas Intermediate and grades from South and Central America, as well as West Africa. These diverse sources, combined with rising freight costs—from roughly $800,000 to $3.5 million per shipment—add further premiums to production, affecting the price of fuel at the pump.
Acknowledging the burden on consumers, Bird said the refinery is making every effort to minimize costs across its supply chain. “We fully recognize the pain being felt. We are doing what we can to keep costs down while ensuring supply security for Nigeria,” he said, emphasizing that domestic refining prevents fuel shortages and long queues even amid global disruptions.
Despite these efforts, fuel prices continue to climb. On Monday, Dangote Refinery raised the gantry price of Premium Motor Spirit to ₦1,175 per litre, an 18.1 percent increase from the ₦995 per litre announced just days earlier. Retail prices in some states have already surpassed ₦1,200 per litre, reflecting the persistent impact of international market fluctuations on domestic fuel costs.
source: punch