The benefits to Nigerians of the price war in Nigeria’s downstream oil sector has become very clear for all to see; a huge thanks to private sector participants for allowing the market mechanism to determine prices. But thanks are due more especially to billionaire industrialist, Aliko Dangote, who, being inclined towards monopoly, has unexpectedly provided a healthy competition for the Nigerian National Petroleum Corporation Limited (NNPCL). The notion, that when two elephants fight the grasses suffer, has been put on-hold by this healthy rivalry and Nigerians seem better-off.
When the economy, by virtue of the combined effects of subsidy removal from the price of imported premium motor spirit (PMS) and the realignment of US dollar rate, went into a tail spin in mid-2023, many wondered which of these would first hit the N1000. The exchange rate made it and raced to N1700 per USD. PMS price won a distant second and struggled to reach N1200- N1300 per litre before Dangote Refinery came on board warranting the initial fisticuffs. PMS prices have been back-tracking since then, from N970 ex depot/gantry price as at November 2024 through N950 in December 2024, N890 as at February 1 2025, N825 as at February 26 2025, N815 as at March 14, 2025, and N699 as at mid-December, 2025.
PMS price reduction and private motorists
Downward-adjustments in PMS price are expected to positively impact private vehicle motorists because when pump prices adjust downwards, more litres are purchased.
Be that as it may, it must be noted that many Nigerian car-owners no longer commute in their own vehicles as the price of PMS relative to their income keeps the commodity out of their reach.PMS price reduction and public transportation
Following the thesis that commodity prices are generally sticky downwards, transport fares, which increased drastically with the upward adjustment of PMS price to N1200, have not significantly reduced, relative to the present efforts by Dangote Refinery. The benefit of PMS price reduction therefore presently accrues to the marketers and transporters and less to the commuting public. One wonders if this does not differ from the intentions of the owners of Dangote Refinery?
Palliatives as rescue — Gift them fish
Perhaps, having noticed the price stickiness in the oil downstream sector and the ineffectiveness of PMS price downward review in reducing costs of transportation across the country, Dangote Refinery went philanthropic by rolling-out plans to gift one million Nigerians each with a 10kg bag of rice through the Dangote Foundation. As commendable as this gesture is, one wonders at its value-for-money credentials.
Job creation — Teach them to fish
Dangote Group of Companies (DGC) has shown capacity to succeed in areas where others have failed – petroleum refining, cement, etc. How I wish the DGC can take an interest in Nigeria’s Steel Mill at Ajaokuta.
Nigeria is in dire need of industrialisation, the rural to urban migration drift being a consequence of the non-industrialised demography of our rural areas. The urban areas are bursting at the seams and are obviously biting more than they seem to have the capacity to chew. One sure way of tackling the ensuing challenges is to provide jobs at the rural areas and this would further impact positively on the country’s security situation. Insecurity is threatening the very life of our social fabric. Rural to urban migration is creating a lot of ungoverned spaces in Nigeria. It will obviously pay the Nigerian masses more if they were provided with jobs rather than palliatives.
Capital
The process of industrialisation requires a number of factors including capital and labour with the sub-set of entrepreneurship. It is not unusual that those who have capital usually lack ideas while those with ideas very often lack capital. Capital accumulation for business initiation is usually a challenge in less developed countries where the ruling class facilitate foreign direct outflows. More so, the sub urban and rural areas of Nigeria, have not been very attractive for business start-ups because of the dearth of supportive infrastructure in those areas.
Dangote Refinery and funds for industrialisation
The 650,000 barrels per day refinery is designed to daily produce a total of 104 million litres of products which likely comprises 57 million litres of PMS, 27 million litres of AGO and 20 million litres of Jet fuel (jet fuel is actually a pristinely refined form of Kerosine). Dangote sells at least 46 million litres of this production locally while 58 million litres are exported. Speaking to NESG in mid-November during a facility tour, Dangote Refinery management posited that about 33 million litres of PMS are sold daily in Nigeria. If PMS pump price is fixed at N850 as against the N739 per litre Dangote Refinery presently sells through MRS Oil Nigeria Plc petrol stations, and the price differentials are channelled differently, the differential of about N135 per litre will yield about N3.663 billion a day; over one trillion naira in a 300 days year. This quantum of capital can be applied at the rate of N1.4 billion for industrialisation-funding for each of Nigeria’s 774 local government areas year after year.
Together with other upcoming local refineries, Dangote Refinery may set up an industrialisation foundation for this purpose. The Dangote Refinery, through the Nigerian Refineries Foundation, has capacity to source needed technology, machinery and expertise at competitive prices while avoiding tendency for over invoicing as would occur using the usual sources. The Nigerian Refineries Foundation may also be tasked with managing the other parties in this arrangement to ensure they play their allotted roles as a pre-condition for providing supportive capital.
The roles of national and subnational governments
Tripartite arrangements, involving Nigerian Refineries Foundation, the government, and the host communities where industrial activities are sited, can be articulated. For instance, the federal government gazettes its national industrialisation plan based on comparative advantages and local endowments to forestall dearth of raw materials.
The federal government via the development commission in each geo-political Zone should provide multi modal transportation linking the states within each zone. Sometimes, the political class at the state levels, unwittingly, duplicate big-ticket projects on a state-wide basis and these litter the landscape. Some projects, like airports, may best be on a geopolitical basis so as to save up state government resources for more needy areas. Multi modal transportation should connect common airports, seaports, railways, and high ways. The geo-political commissions should maintain linkages with tertiary institutions in the zone to encourage institutional specialisation in the industries allocated to the zone by the national industrialisation plan. The commission may also champion the establishment of world class medical facilities in particular subsets of medical discipline in their geo-political zone.
The sub-national governments should create, in each local government area, industrial zones and provide them with land and infrastructural support viz water, electricity, roads, security posts etc while housing, medical and educational facilities may be provided with private sector participation. The provision of these facilities should be the prerequisite for procurement of necessary technology, machinery and expertise by Nigerian Refineries Foundation.
The host communities would have stakes in the industries in their LGAs via share purchases to fund operational and other expenses of the industries. Perhaps, a regional bourse would be required. This will help with stock exchanges within a geopolitical zone.
Other consequences
Maintaining PMS prices at between N830 and N870 per litre will promote price stability in the economy and improve Nigerians’ living standards. This is envisaged to be of greater benefit than PMS price fluctuations which have potentials of periling the masses since stability in prices of other consumer and capital commodities leverage on stability of PMS price.
Industrialisation would reduce youth unemployment and consequently insecurity.
Sustained growth in the GDP would translate to improvements in living standards.
Rural to urban migrations would be stemmed and consequently reduction in insecurity due to large, uninhabited and consequently, ungoverned spaces.
The potential creative capacities inherent in Nigeria’s youthful population will be well explored and unleashed.
Ownership structures
It is vital that Nigeria’s local refineries will, by law, fund the Nigerian Refineries Foundation, a proposed Civil Society Organisation dedicated to the industrialisation of Nigeria. Sixty-five percent shares of industries set up in each local government via this model should be owned by the indigenes and residents of the host communities to ensure business sustainability. Other components of ownership structure could include: state governments – 15%. LGA – 10% and the Association of Town Unions in the host communities – 10%.
Each industry should be managed by a Board of 10 persons, seven of whom would be elected by the shareholders while the State, the Local and the town unions association may each appoint one person into the Board.
