Dangote warns that rising Nigerian petrol prices and its inflationary impact could get worse

AFRICA'S richest man Alhaji Aliko Dangote has warned that the current economic crisis that has led to rising Nigerian petrol prices as a result of the Middle East war could get worse if the conflict escalates.

Dangote Industries, which operates Africa's largest petroleum refinery at Lekki in Lagos State, is a major player in the Nigerian oil industry. Since the start of the month, it has had to increase petrol prices four times as a result of the rising cost of crude oil on the global market precipitated by the US/Israeli war with Iran.

With the cost of Brent Crude, identical to Nigeria's Bonny Light Crude rising to  about $104 a barrel, the Dangote Refinery has increased the price of its refined petrol to $1,245 per litre. This in turn has led to some petroleum marketers and filling stations in Abuja to hike their petrol pump price to between N1,331 and N1,430 per litre.

This has had an inflationary impact on the Nigerian economy as petrol tends to have a domino effect on other prices due to the fact that virtually all of the country's goods are transported by road. Speaking after a meeting with President Bola Tinubu in Lagos, Alhaji Dangote has warned that the situation might get worse if the crisis escalates.

Alhaji Dangote said: “If the situation does not de-escalate, we will end up paying a heavy price. Energy affects everything, from small businesses like barbers to industries running generators, so everyone will feel the impact if costs continue to rise.”

Yesterday, global crude oil prices halted their incessant rise amid expectations that President Donald Trump of the US was willing to negotiate a peaceful solution to the crisis. However, prices have picked up again today after the Iranian authorities denied any knowledge of peace talks with the US.

Before this crisis, Nigerians were buying petrol for  N875 a litre but with global supplies threatened with the  closure of the Straits of Hormuz by Iran, the market is very volatile,. Dangote Industries' 650,000 a barrel capacity refinery buys a lot of its crude internationally market, so Nigeria is not immune from the vagaries of the global market.

With rising oil prices already starting to bit hard, Nigeria's Organised Private Sector and the Nigeria Labour Congress (NLC) have called for urgent government intervention. They warned that the situation will ultimately lead to worsening inflation, job losses and business closures if nothing is done.

Stakeholders have urged the federal government to introduce immediate relief measures, including tax incentives for refiners, naira-based crude supply and temporary subsidies, while accelerating long-term reforms in the energy sector. However, marketers argued that the Nigerian federal government cannot cap petrol prices as has been done in China, saying the sector is deregulated.

NLC assistant secretary-general, Chris Onyeka, said Nigerians are paying the price for the  monopoly in the downstream petroleum sector. He added that the poor Nigerian workers and the masses are reaping the consequences of adopting a monopoly, drawing parallels with the cement industry.

According to the NLC, the downstream petroleum sector operates as a seller’s market, in which dominant players control prices.  It added that statistics show Nigeria has the highest income credit for refined petroleum products, yet ordinary Nigerians receive none of the benefits.

Mr Onyeka added: “The government sponsors them, repairs them, compensates them and makes them the monopolist. Until we organise ourselves and exercise our sovereign will, there will be no mercy.

"We will not benefit from this country. Unions, workers, students, artisans and citizens need to act together to challenge monopolistic control over essential commodities."

He pointed out that public refineries could operate efficiently if the existing workforce were properly engaged and managed. Nigeria has three government-owned refineries in Port Harcourt, Warri and Kaduna but all broke down and despite millions of dollars spent on repairs, none is operating like the Dangote Refinery.