PMS Price Drop: Dangote Refinery’s Role and the Policy Questions Ahead


 
By Muhammad Isah Ramat

The recent reduction in the pump price of Premium Motor Spirit (PMS) to about ₦700 per litre has been widely welcomed by Nigerians. While the federal government has linked the development to ongoing reforms in the petroleum sector, industry analysts point to the emergence of the Dangote Refinery as a major factor influencing the new pricing dynamics.
Nigeria’s state-owned refineries in Port Harcourt, Warri and Kaduna remain largely non-operational despite years of rehabilitation efforts and significant public spending. As a result, fuel supply has historically depended on importation, exposing prices to foreign exchange volatility and global market shocks.
The entry of the 650,000 barrels-per-day Dangote Refinery—the largest in Africa—has introduced a new supply reality. Even before full nationwide distribution, its production of PMS has increased competition in the downstream market and reduced the pricing power previously held by fuel importers. This shift has contributed to the recent moderation in pump prices.
Experts note that while the removal of fuel subsidies and market liberalisation under President Bola Ahmed Tinubu created room for price adjustments, domestic refining capacity is critical for sustainable price stability. Without local production at scale, policy reforms alone would have limited impact on fuel costs.
However, concerns remain over policy consistency. Continued fuel importation, foreign exchange constraints, regulatory uncertainty, and long-standing issues of corruption and misuse of office in the downstream sector are seen as factors that could limit the full benefits of local refining.
The Dangote Refinery is widely regarded as a strategic national asset with significant positive implications for Nigeria, including improved energy security, reduced fuel import bills, job creation, and stronger investor confidence. Analysts argue that protecting and supporting such large-scale domestic investments through clear and fair policies is essential for long-term economic stability.
As Nigeria navigates its post-subsidy era, stakeholders stress the need for transparent governance, coherent energy policies, and balanced recognition of both public reforms and private sector contributions in shaping outcomes within the petroleum industry.

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