Nigeria Debates New Petrol Pricing and Production Strategies

The Government of Nigeria is evaluating new strategies to lower petrol prices following the 2023 removal of consumption subsidies. One primary proposal involves a production-based subsidy that would provide domestic refineries with crude oil on preferential terms to reduce import dependence and encourage local refining. However, government officials have expressed concern that these concessions could drain public revenue and recreate market distortions.

Parallel to these government deliberations, Gbenga Olawepo-Hashim, the presidential candidate for the Accord Party, has proposed an alternative energy policy. His model aims to reduce petrol prices to between ₦200 and ₦300 per litre by basing prices on domestic production costs rather than international benchmarks. He suggests a starting price of approximately ₦605 per litre based on current domestic costs.

To achieve these reductions, Olawepo-Hashim advocates for a forensic audit of the petroleum value chain and increased support for modular and large-scale refineries, such as the Dangote Petroleum Refinery & Petrochemicals Fze. He also emphasizes the need for exchange-rate stability to lower the underlying cost of energy and improve national productivity.