Mkpoikana Udoma
Port Harcourt — Increasing global crude oil prices, a weakening Naira, and long-standing structural inefficiencies have driven a fresh surge in petrol and diesel prices across Nigeria, exposing the country’s deep vulnerability to external shocks despite being Africa’s largest oil producer.
In recent weeks, petrol prices have climbed above N1,300 per litre in several cities across the country, while diesel has surged beyond N1,800 per litre, reversing earlier stability and intensifying pressure on households and businesses.
Global Oil Shock Meets Domestic Fragility
Industry operators attribute the spike largely to geopolitical tensions in the Middle East, the US-Israel Vs Iran conflict, which has pushed global crude prices above $90 per barrel amid fears of supply disruptions.
“When global crude prices rise, the cost of importing refined petroleum products increases immediately, and that is what we are seeing reflected in pump prices,” a downstream operator said.
The shutdown threats around the Strait of Hormuz, a key global oil transit route, have heightened supply fears, pushing up crude prices and raising refining costs worldwide.
“The landing cost of imported PMS has ballooned due to higher crude prices. With subsidy gone, Nigerians are now paying the full market price,” a petroleum marketer added.
Why Nigerian Feels It More Than Others
Data from The Cable suggests Nigeria’s price increases are among the steepest globally, with fuel prices rising by about 40 percent in a short period.
While countries like Vietnam, Cambodia, Laos, Australia, and the United States also recorded increases, analysts note that Nigeria’s economic structure amplifies the impact.
“The exchange rate is a major factor. With the naira under pressure, import costs rise sharply, even if crude prices remain unchanged,” an economist explained.
Unlike many countries, Nigeria depends heavily on petrol and diesel not just for transportation but also for electricity generation, water supply, and business operations.
“For many Nigerians, fuel is not just about cars. It is about powering generators, running businesses, and even accessing water,” an analyst noted.
Deregulation and the ‘True Cost’ of Energy
The removal of fuel subsidies has exposed consumers to full market realities, making domestic prices highly sensitive to global shocks and currency fluctuations.
“The era of controlled pricing is gone. What we are seeing now is the true cost of energy in a deregulated market,” a petroleum marketer, Dr Joseph Obele, told SweetCrude Reports
This has intensified inflationary pressures, as rising energy costs cascade into transport fares, food prices, and overall cost of living.
Billions of Dollars Spent, Refineries Still Idle
At the heart of Nigeria’s vulnerability is its long-standing failure to maintain functional domestic refining capacity.
Since 1999, successive governments have spent billions of dollars on the rehabilitation of Nigeria’s four state-owned refineries in Port Harcourt, Warri, and Kaduna, with nothing to show for it.
The country’s three state-owned refineries, namely Port Harcourt Refining Company, Warri Refining and Petrochemical Company, and Kaduna Refining and Petrochemical Company, remain absolutely non-functional despite massive rehabilitation spending.
The Federal Government between 2015 and 2023 spent approximately $6.46 billion (about N2.68 trillion) on rehabilitating the Port Harcourt, Warri, and Kaduna refineries. However, some reports suggest the total expenditure could be higher, with estimates ranging from N11.34 trillion to $18 billion spent over the years.
In 2021, the government approved the sum of $1.5 billion for the rehabilitation of the Port Harcourt refinery, $ 897 million for the Warri refinery, and $1.3 billion for the Kaduna refinery.
However, despite these massive investments, the refineries remain largely non-operational, forcing the country to rely heavily on imported refined products.
“Year after year, funds have been committed to refinery repairs, but the outcome has not matched the investment. That is a major structural failure,” an energy analyst said.
Crude Supply Constraints and Refining Paradox
Even with the emergence of private refining capacity, (Dangote in Lagos, WalterSmith in Imo State, and Aradel refinery in Rivers State), domestic supply challenges persist.
Analysts say Nigeria has forward-sold significant volumes of its crude under financing arrangements, limiting supply available to local refiners.
“Because of these constraints, local refiners are forced to import crude. That adds to cost pressures and ultimately affects pump prices,” an industry source said.
This paradox, being a major crude oil producer that imports both refined products and even crude for refining, continues to undermine energy security.
Multiple Cost Burdens on Nigerians
Nigeria’s weak infrastructure further magnifies the impact of rising fuel prices.
Unlike countries with stable electricity systems, Nigerians rely heavily on petrol and diesel generators, effectively paying for both energy and basic services.
“The average Nigerian is dealing with multiple layers of cost. You are not just buying fuel for mobility; you are buying fuel electricity, water access, and business survival,” a Port Harcourt-based business owner, Ms. Molly Unwomanugbo said.
Small businesses are particularly affected, as rising diesel costs significantly increase operating expenses.
“The cost of keeping shops open has gone up sharply because of diesel. Many businesses are struggling to remain viable,” the business owner said.
Activist Perspective: Structural Failure Driving Energy Crisis
Weighing in, Dr. Fyneface Dumnamene, a rights activist and Executive Director of the Youths and Environmental Advocacy Centre, YEAC-Nigeria, said Nigeria’s recurring fuel crises reflect deeper governance and policy failures of successive administrations in the energy sector.
According to him, the country’s inability to fix its refineries after decades of investment continues to expose citizens to avoidable difficulties and hardships.
“Nigeria should not be in this position as an oil-producing country. The failure to make our refineries work has left us at the mercy of global energy shocks,” he said.
Dumnamene stressed that the continued reliance on imports, combined with deregulation and foreign exchange pressures, have transferred the burden of failures and inefficiencies directly to citizens.
“What Nigerians are paying today is not just the high cost of fuel; it is the cost of systemic inefficiency and policy failures over the years,” he added.
The Way Forward: Breaking the Cycle
Experts say Nigeria’s recurring fuel price shocks point to a deeper need for structural reforms.
Key solutions identified by stakeholders include, revamping or concessioning state-owned refineries; rather than continued government-led rehabilitation, experts advocate for private sector management or outright sale.
Other solutions include, “Strengthening local refining capacity; Supporting private refineries including modular refineries, as well as ensuring steady crude supply to domestic processors.
“Stabilising the Naira; reducing exchange rate volatility to lower import costs.
“Investing in power infrastructure; expanding electricity generation and distribution to reduce dependence on fuel-powered generators.
“Developing strategic petroleum reserves; creating buffers to cushion the impact of global supply disruptions.
“Fixing the refineries or concessioning them is no longer optional. It is critical to reducing Nigeria’s exposure to global shocks,” an energy economist said.
An Economy Exposed
As global oil markets remain volatile, Nigeria’s structural weaknesses continue to amplify external shocks.
“Everything is connected to everything; energy, transport, water, and productivity. When one fails, the cost is transferred to citizens in multiple ways,” an economist said.
Until fundamental reforms are implemented, analysts warn that Nigeria will remain highly exposed to global oil market fluctuations, with fuel and diesel prices rising sharply whenever external disruptions occur.
