Nigeria: Fuel prices rise to 1,400 naira despite Dangote refinery operating at full capacity

In Nigeria, the price of petrol has reached approximately 1,400 naira per liter in Lagos and Abuja, up from nearly 1,200 naira a month earlier, even as the Dangote refinery operates at full capacity, producing 700,000 barrels per day.

The increase is even more pronounced in some northern regions, where the price per liter has surged to 1,500 naira, while diesel exceeds 2,000 naira. This rise follows the adjustment of the Dangote refinery’s output price to 1,350 naira per liter on September 12.

The price hike is primarily driven by the rising cost of crude oil in a market that is now largely deregulated. Local production and refining do not eliminate this exposure, as the crude oil used by the refinery retains a value linked to international prices, and domestic prices are no longer offset by a general subsidy.

This latest surge comes at a time when overall inflation had just slowed to 15.39% in August, down from 15.43% in July. However, food inflation remains at 19.57%, and analysts surveyed by Reuters believe that a sustained increase in fuel prices could put further pressure on prices and purchasing power.

The government has ruled out a return to fuel subsidies and is instead focusing on compressed natural gas (CNG) to reduce transportation costs. The presidency reports over 120,000 converted vehicles, more than 400 certified centers, and over 90 CNG stations, aiming for measurable reductions in transport fares starting October 1.

Local refining alone is not enough to break the global crude oil price.

The Dangote refinery has significantly altered Nigeria’s oil trade without changing the economic nature of fuel. Gasoline imports, which were around 400,000 barrels per day in 2024, have dropped to about 83,000 barrels per day in 2026, while the refinery produces between 270,000 and 300,000 barrels of gasoline daily. Thus, Nigeria is much less dependent on foreign shipments of finished products, but the cost of raw materials continues to follow a tight international market.

This distinction is crucial. A local refinery reduces shipping costs, the need for imported refined products, and some foreign exchange outflows, but it does not convert Nigerian crude into administratively priced oil. As soon as the cost of a barrel rises, the economic price of crude delivered to the refinery also increases, and the removal of the subsidy allows this rise to be transmitted more directly to wholesale prices and then to gas stations.

Moreover, Dangote operates as a commercial refinery catering to multiple markets. In the first half of 2026, the company reported a net profit of $1.82 billion on revenues exceeding $13 billion, while Europe purchased about 80,000 barrels per day of Nigerian jet fuel in the second quarter. These exports do not prove that they are causing domestic price increases, but they indicate that the plant is balancing its sales in a regional and global market rather than within a protected public pricing system.

CNG can cushion the shock, but only where the network exists.

The government’s response, therefore, is less about artificially lowering fuel prices than about reducing their role in transportation. CNG already offers significant price differentials on certain corridors supported by the government. In Abuja, converted vehicles are applying discounts of 40% on several routes, while in Oyo, the initial fare for the Lagos-Ibadan route has dropped from about 8,000 to 3,200 naira on the affected buses.

The main obstacle remains scale. More than 120,000 conversions and 90 stations represent a growing infrastructure, but it is still insufficient to quickly neutralize a national rise in petrol and diesel prices. President Bola Tinubu has urged states to accelerate conversions and alternative fleets so that more users can experience effective fare reductions starting October 1, 2026.