Dangote Slashes Fuel Prices–Who Will Lower Transport and NEPA Bills? –By Matthew Ma

Nigeria’s downstream petroleum sector has entered what industry players are calling a full-scale price war following Dangote Petroleum Refinery’s decision to reduce the price of Premium Motor Spirit (PMS). This change began on December 17, when the Dangote refinery lowered its pump price from N828 per liter to N699. While many Nigerians have welcomed this price drop as a considerable relief during the festive Yuletide season, fuel marketers operating filling stations nationwide are counting significant losses, as they sell their fuel stocks purchased at higher prices at a loss. During a press briefing on December 14, Aliko Dangote, President of the Dangote Group, insisted that all MRS filling stations must sell petrol at N739 per liter nationwide starting December 17. He stated that any MRS filling station selling fuel above N739 should be reported to him immediately.

To stay competitive, importers and private depot owners are forced to reduce their prices to match those of Dangote refinery. Research I conducted in Gboko and Makurdi, Benue State, revealed that private petroleum depots slashed PMS prices from N920 to N840 within just a few days of Dangote’s announcement. I observed multiple fuel stations in Makurdi selling PMS at N840 per liter, down from an average of N920 per liter the week prior. At Shafa private depots in Makurdi and Gboko, the price of Premium Motor Spirit (PMS) decreased from N920 per liter on December 8 to N840 per liter on December 18, marking a reduction of N80. Similarly, Rain Oil depots in Makurdi and Gboko lowered PMS prices from N920 per liter to N890, reflecting a N30 decrease. A.A. Rano Depot like Shafa cut its price from N920 to N840 per liter, resulting in an N80 reduction. Overall, these adjustments indicate an average 14 percent reduction across depots in Makurdi and Gboko, primarily driven by competitive pressure from Dangote Refinery’s aggressive pricing strategies.

The decline in petrol prices, attributed to the operations of the Dangote Refinery, has gotten many Nigerians thinking. For the first time in years, consumers are experiencing a downward trend in fuel costs during the festive season. While this development is noteworthy, it also prompts a broader, more pressing question: when will the relief at the pump translate into lower electricity bills, lower transportation costs, and lower consumer goods prices? Fuel is a critical component of Nigeria’s economic framework, directly influencing transportation systems, small-scale electricity generation, and the pricing dynamics of a wide range of goods. Given the essential nature of fuel in these sectors, one would expect that lower fuel costs would result in lower operating expenses for businesses and consumers alike. Theoretically, such a reduction should lead to cascading benefits across the economy, lowering prices and improving the affordability of essential services. However, the reality is that lower fuel prices have not brought any substantial benefits to Nigerians. In the electricity sector, a glaring contradiction exists despite years of proposed reforms and numerous tariff adjustments. Nigerians remain entangled in a web of persistent power supply shortages. Many households are forced to cope with erratic electricity supply, which is often accompanied by exorbitant estimated billing practices. Also, each time families and businesses experience slight savings from lower fuel costs, they find themselves spending more by incurring much higher electricity costs or by investing in generators to offset the unreliability of the public power supply. To create a more reliable, continuous power supply, it is crucial to have influential figures in the power sector with an ambitious spirit and investment style similar to that of leaders like Aliko Dangote. If we can have one or two Dangotes in the energy market, we could foster innovation, attract further investment, and ultimately ensure a stable power supply that would alleviate the burden on families and businesses alike.

Public transportation fares have not been revised to reflect the potential savings from declining fuel prices. Transport unions and operators tend to raise fares promptly in response to rising fuel prices, yet they are often slow to lower them when prices fall. This festive season, I expected transport companies to reduce transportation costs due to the decline in fuel prices, but to my surprise, they did not. Research conducted in the Makurdi metropolis reveals that only Benue Links reduced its transportation costs during the yuletide season. In contrast, companies such as Victoria Travels increased their fares on the Abuja-Makurdi route, raising the price from N12,000 to N15,000. However, just days before Christmas, upon realizing they would be returning to Abuja with empty seats, they lowered the transportation fare to N6,000 for walk-in passengers and N12,000 for online bookings.

In both the Western and Eastern parts of the country, just hours before Christmas Day celebrations, transport fares along major routes from Lagos to Enugu, Aba, Owerri, Onitsha, and Abakaliki have surged by 45 to 50 percent, according to Sahara Reporters. Observations made on Christmas Eve indicated that commuters were taken by surprise as commercial transport operators raised their fares, citing heavy passenger traffic in one direction and the costs associated with returning empty as the reasons for the increase. At the GIG Motors terminal in Jibowu, a one-way ticket from Lagos to Enugu costs N64,750, while a ticket to Owerri costs N62,450. Young Shall Grow Motors charges N60,500 for trips from Jibowu to Awka in Anambra State and to Owerri in Imo State. Chisco Transport Services offers tickets from Jibowu to Benin, Enugu, and Port Harcourt for N50,000. Additionally, other well-known transport companies impose fares ranging from N48,000 to N50,000 for eastern routes, with some luxury services quietly charging between N70,000 and N95,000.

The owners of transportation companies have asserted that their buses are returning to their designated routes with a considerable number of empty seats. They argue that this situation has created a pressing need for a fare increase to offset the resulting revenue loss. However, this reasoning is not only shortsighted but also deeply insensitive, particularly in an era when numerous individuals across the country are facing genuine financial hardships. In a landscape that mirrors the challenges in the power sector, there is a pressing need for greater competition in the transportation industry. Introducing one or two key players, as Dangote has disrupted and transformed the fuel market, could effectively dismantle the current monopoly in the transportation system. This would not only foster healthier competition but also potentially lead to more reasonable fare structures that account for the economic realities faced by everyday commuters.

Manufacturers and traders often cite a range of factors for the ongoing rise in prices, including elevated energy and transportation costs and fluctuations in foreign exchange rates. While these factors carry some weight, the recent decline in fuel prices should, in theory, translate into lower production and distribution costs. Unfortunately, we are witnessing the opposite effect, where prices remain stubbornly high. The absence of downward price adjustments in the market raises significant concerns regarding potential structural issues that may be undermining its overall health and functionality. This scenario suggests the likelihood of market concentration, where a limited number of large entities wield considerable power and influence over pricing. Such concentration can suppress competition, making it challenging for smaller firms to enter the market or flourish, and consequently leading to sustained higher prices for consumers.

Furthermore, persistent inflationary expectations are contributing to businesses’ hesitance to reduce prices. Many companies believe costs will keep rising, prompting them to maintain or even raise prices to anticipate future expenses. This cycle of expectation creates a self-fulfilling prophecy, in which the fear of inflation prevents necessary price adjustments, ultimately eroding consumer purchasing power and harming the market as a whole. In a country as economically diverse and entrepreneurial as Nigeria, there is a pressing need for more individuals and entities capable of establishing large-scale retail operations akin to mega shops like Shoprite or Spar. Such developments could provide significant support to existing efforts, particularly by influential figures like Dangote in the fuel sector. By fostering more competition in the retail environment, we can help ensure that consumers are better insulated from arbitrary price increases, allowing them to wake up each day to a more stable and favorable economic landscape—one where prices do not unexpectedly rise even as overall economic conditions steadily improve.

Dangote’s intervention has achieved more than simply lowering fuel prices; it has highlighted the limitations of single-sector reforms within a structurally imbalanced economy. Energy costs are interrelated; thus, having affordable fuel without parallel reductions in electricity costs, efficient transportation, and competitive markets provides only minimal relief. The government must assume a coordinating role—through regulation, infrastructure investment, and consumer protection—to ensure that inefficiencies in one area do not undermine cost reductions in another. Nigerians have every right to pose challenging questions. If local refining can lead to lower fuel prices, why then does electricity continue to be both expensive and unreliable? If fuel costs are reduced, why do transport fares remain the same and market prices continue to escalate? The answers do not rest solely with individual actors; they lie within governance systems that need to be more responsive, transparent, and accountable.

The issue at hand is not simply identifying who will lower NEPA bills but instead finding those who can rectify the systemic flaws that lead to unjustifiably high bills. Unlike fuel pricing, which can rapidly adjust to production efficiencies, electricity pricing is deeply intertwined with structural failures across generation, transmission, and distribution. Unless these challenges are addressed comprehensively, any attempts at tariff reductions will remain politically contentious and economically perilous. The reduction in fuel prices has recalibrated expectations, demonstrating that energy costs are not fixed and that decisive action can yield real benefits. It is now essential for the government and regulatory bodies to exhibit a comparable level of urgency and consistency in the power sector. This involves enforcing service standards, expediting metering processes, minimizing both technical and commercial losses, and ensuring that consumers are not shouldering the burden of inefficiencies.

Nigerians are not asking for miracles; they seek fairness. Affordable fuel should be accompanied by affordable power, and higher tariffs must be matched by a reliable supply. Dangote has contributed to alleviating one aspect of the energy burden. The challenge for the government and the power sector is to demonstrate that electricity reform is not just an ongoing promise but a tangible reality. Until that is achieved, cheaper fuel will remain only a partial victory in a country still grappling with the inflated cost of darkness. While lower fuel prices are a positive development, they represent only the beginning of the journey. Until electricity bills decrease, transport costs stabilize, and consumer goods become more affordable, the promise of economic relief will remain unfulfilled. The challenge now is to transform this sectoral achievement into a widespread enhancement of the cost of living—one that Nigerians can experience not only at the fuel pump but also in their homes, markets, and daily lives. Dangote reduces fuel prices—who will lower transport and NEPA bills?

Rev. Ma, S. J., is a Jesuit priest and a public policy analyst. He currently writes from Abuja, Nigeria.