Nigeria’s state-owned oil company, NNPC Ltd, raised gasoline prices by more than 15 percent, marking its second hike in less than a month and the abandonment of a costly subsidy program that put its finances under strain.
At NNPC filling stations in Lagos, the price of petrol increased from 858 naira to 998 naira per liter ($0.6257), while in Abuja, the price increased from 950 naira to 1,030 naira per liter. Long queues formed as customers came to terms with the price hike.
NNPC, the country’s sole importer of refined products, can now recover its full costs, after purchasing gasoline from the Dangote Oil refinery at 898 naira per liter.
This is the first time in three decades that Nigeria has sold gasoline at market price, relieving the exchequer of the high cost of subsidies, which is expected to cost the government at least $3.7 billion this year.
President Bola Tinubu removed a costly but popular gasoline subsidy when he took office last year to reduce public spending. But he reintroduced the subsidies in part after soaring inflation, which deepened the cost of living crisis and stoked tensions among the population.
In September, NNPC said it was facing serious financial difficulties, admitting it was unable to continue importing fuel after weeks of shortages at its fuel stations.
The price increase has drawn criticism from unions and manufacturers, who fear it will worsen the cost of living crisis.
The price of gasoline is a particularly sensitive issue in Nigeria, where millions of households and small businesses rely on fuel-powered generators due to the country’s failing national power grid.
Last week, Nigeria began selling crude oil to the Dangote refinery in naira on the understanding that the refinery would fully meet the country’s fuel needs. This month, NNPC is supplying the refinery with 13 cargoes of crude oil.
Dangote Refinery Director Edwin Devakumar said the facility now had the capacity to meet all of Nigeria’s needs.
Industry insiders say that with gasoline now sold at market prices, NNPC will no longer be the sole buyer of Dangote Refinery products.
“We have requested to buy directly from the Dangote refinery, but this has not yet been finalized. For now, we continue to buy through the NNPC,” said Billy Gillis-Harry, head of the refinery. a local association of fuel traders.
(1 $ = 1 595,0000 naira)
