E-Financial
Refining Without Relief: How Global Oil Wars, Market Structure, and Monopoly Risks Still Drive Fuel Prices in Nigeria
By Blaise Udunze
The vision was bold. The expectation was clear. And the promise was powerful. When the Dangote Refinery began operations, it was hailed as Nigeria’s long-awaited escape from decades of energy contradiction, which involves exporting crude oil while importing refined fuel at high costs. It was meant to guarantee supply, stabilize prices, conserve foreign exchange, and most importantly, deliver relief to ordinary Nigerians.
What appears to be a distinct contradiction is that, despite months into its operation, a different reality is emerging, with fuel prices rising sharply. Inflationary pressures are intensifying. This occurrence has forced Nigerians to ask a difficult question once again, one that calls for an urgent answer. Why does a country that produces and refines crude oil still suffer the consequences of global oil shocks?
Looking at the trend, it is clear that the answer lies not just in geopolitics, but in the deeper structure of Nigeria’s oil economy, where global pricing, policy gaps, and now the looming risk of monopoly intersect.
With the recent development, the latest alarming surge in petrol prices has been driven largely by escalating tensions in the Middle East. This is particularly the U.S-Israel strikes on Iran and retaliatory measures from Tehran. A well-known fact is that at the center of the crisis is the Strait of Hormuz, a vital oil transit route through which a significant portion of global supply flows. Any disruption, even a speculative one, triggers immediate spikes in crude prices.
Within a week, oil prices jumped from the mid-$60 range to nearly $120 per barrel. For global markets, this is expected. For Nigeria, it is devastatingly ironic. Because, despite having crude oil in abundance and despite refining it locally, Nigeria remains fully exposed and this has continued to re-echo the same ironic question.
In a rare moment of corporate candor, the refinery’s leadership acknowledged this reality. The plant is deeply affected by global shocks. Crude oil, even when sourced locally, is priced at international benchmarks. Shipping costs have surged dramatically, from about $800,000 per tanker to as high as $3.5 million. Insurance premiums have climbed, and logistics have become significantly more expensive, with total costs further driving higher.
Even more revealing is the refinery’s sourcing structure. Only about 30 percent – 35 percent of crude comes from the Nigerian government supply under the crude-for-naira framework. A significant portion is still purchased in U.S. dollars on the open market, while another 30 percent – 40 percent is sourced internationally, including from the United States and other regions. This means the refinery is not insulated; it is integrated into the global oil system. The implication is unavoidable as local refining has not translated into local pricing control.
The impact on Nigerians has been immediate and severe, as petrol prices have surged from under N800 earlier in the year to over N1,200, and in some regions, it is even more alarming when the prices skyrocketed close to N1,400 per litre. Within weeks, multiple price increases have been recorded, driven largely by global crude price spikes and rising logistics costs. Doubtless, the country has witnessed the consequences ripple across the economy as transport fares rise, food prices increase, businesses struggle with higher operating costs, and inflation accelerates.
The development has attracted the attention of the labour unions and the organised private sector, prompting them to raise concerns and alarm about the consequences of job losses, business closures, and worsening hardship if the trend continues with each passing day, witnessing a daily increase and causing possible artificial scarcity.
Nigeria remains trapped in a painful contradiction. It produces crude oil. It refines crude oil. Yet it cannot protect its citizens from global oil volatility. As Aliko Dangote himself acknowledged, Nigeria has no direct role in the conflict driving these price increases, yet it bears the consequences due to global economic interdependence.
In a real sense, this is the deeper tragedy, as Nigeria has achieved capacity without control.
At the heart of the issue is a structural reality, crude oil is priced globally, not locally. Even under the crude-for-naira arrangement, pricing is benchmarked against international rates. This means refineries pay global crude prices, fuel prices reflect global market conditions, and domestic consumers absorb international shocks. In essence, Nigeria has moved refining home without bringing pricing sovereignty with it.
To be fair, the Dangote Refinery has played a stabilizing role. Nigeria still enjoys relatively lower petrol prices compared to many global markets. In several countries, supply disruptions have led to panic buying and rationing, while Nigeria has maintained a consistent supply. As the refinery’s CEO aptly noted, what is worse than $120 oil is no oil. The refinery has prevented scarcity, but it has not prevented high prices. Availability, in this case, has not equated to affordability, which is the painful part for the citizens.
While much of the current debate focuses on pricing, another critical issue is quietly taking shape, which is the risk of market concentration. Dangote Refinery deserves credit for its scale and ambition, but scale brings power, and power demands oversight. If fuel importers are gradually pushed out and no competing refineries emerge at scale, Nigeria could find itself transitioning from a public sector monopoly to a private sector dominance led by a single player.
Nigeria has seen this pattern before. In the cement industry, increased domestic production did not necessarily translate into lower prices. Limited competition allowed prices to remain elevated despite local capacity. The same risk now looms in the downstream oil sector. Without competition, price-setting power becomes concentrated, supply risks increase, and consumer protection weakens. In a country with fragile regulatory institutions, this is not a theoretical concern; it is a real and present danger.
No one should perceive this wrongly, because it is important, however, not to misplace blame. It should be made known that the Dangote Refinery is not a charity; it is a private enterprise operating within market realities. It must recover its investment, manage costs, and deliver returns. Its exposure to global pricing is not a failure of intent but a function of the system within which it operates.
The real issue lies in the structure of the market and the absence of sufficient competition.
It is no longer news that Nigeria’s downstream sector is now largely deregulated following the removal of fuel subsidies. While deregulation has reduced government fiscal burden and encouraged private investment, it has also exposed consumers to price volatility and limited the scope for intervention, as this has continued to cause pain. Markets, in theory, deliver efficiency, but in practice, they require competition and effective regulation to function properly. Without these, deregulation can simply replace one form of inefficiency with another.
Nigeria does not need to weaken Dangote Refinery; it needs to multiply it. The goal should be to build a competitive refining ecosystem to replace one dominant structure with another. The truth is not far from this, as part of a lasting solution, it requires encouraging new refinery investments, removing bottlenecks for players such as BUA and modular refineries, ensuring transparent crude allocation, providing open access to pipelines and storage infrastructure, and enforcing strong antitrust regulations.
Competition remains the most effective regulator of price, which is sacrosanct and it protects consumers, strengthens supply security, and reduces systemic risk.
This must also be perceived beyond competition, which calls for the government to act strategically. The fact is that when supplying crude to local refineries at discounted or stabilized rates, expanding naira-based transactions, and introducing temporary relief measures during global crises are all viable options that must be put into consideration. Energy is too critical to be left entirely to market forces, especially in a developing economy where millions are highly vulnerable to economic shocks.
It is time that Nigerians understood that the nation’s refining crisis has been decades in the making, and it cannot be solved by a single refinery, no matter how large. If asked, it will be said that this is a fact that can’t be argued. The Dangote Refinery is undoubtedly a turning point, but it will only remain so if it is embedded within broader systemic reform. Otherwise, Nigeria risks replacing one form of dependency with another, from import dependence to domestic concentration.
The question is no longer whether Nigeria can refine crude oil. It can. The real question is whether Nigeria can build a system that ensures fair pricing, competitive markets, consumer protection, and economic resilience, as these are exactly the core answers.
If global conflicts continue to dictate local fuel prices, if monopoly risks go unchecked, and if citizens remain vulnerable despite abundant resources, then the promise of local refining will remain unfulfilled, as it will bring no expected relief.
What is playing out is the well-known fact that in refining, as in democracy, concentration of power is dangerous. And in both, the strongest safeguard remains the same, competition, transparency, and institutions that serve the public interest.
Blaise, a journalist and PR professional, writes from Lagos and can be reached via: [email protected]
Taiwo Oyedele, minister of Finance and coordinating minister of the Economy, has said that Africa’s payment ecosystem should move beyond traditional systems that rely on third-party currencies for cross-border transactions, noting that such arrangements increase costs and create inefficiencies.
Taiwo Oyedele, minister of Finance and coordinating minister of the Economy
To this end, he proposed the development of an Africa-wide payment card that would enable direct transactions between African currencies without requiring conversion through the United States dollar or other intermediary currencies, as part of efforts to deepen intra-African trade and reduce transaction costs.
Oyedele, made the proposal while receiving a delegation from Mastercard in Abuja.
Currently, most card payments between African countries are routed through currencies such as the U.S. dollar. For instance, when a Nigerian cardholder makes a purchase in Ghana, the transaction is often converted from Ghanaian cedis to U.S. dollars before being converted into naira, attracting additional costs through multiple exchange-rate conversions.
Speaking during the meeting, the minister urged Mastercard to support the creation of a payment system that allows direct settlements between African currencies.
“We hope that, for example, we have a payment card that you can use to pay from naira to Kenyan shillings, to South African rand, without a third currency. And we know you can make it possible,” Oyedele said.
He said eliminating intermediary currencies would improve payment efficiency, reduce transaction costs and strengthen economic integration across the continent, particularly under the framework of the African Continental Free Trade Area (AfCFTA).
The minister also called on Mastercard to expand access to credit cards in Nigeria, describing consumer credit penetration as low even among top public officials and high-income earners.
“Based on my own personal experience, one of the areas where we hope you will take the lead is just making credit cards available to Nigerians.
It is difficult, even for someone at my level, to get a credit card,” he said.
While acknowledging the progress made by Nigeria’s financial technology sector, Oyedele said there remains significant room for growth and innovation.
He noted that Nigeria hosts five of Africa’s nine fintech unicorns, reflecting the country’s growing prominence in the continent’s digital finance landscape.
“Our fintech sector is quite developed, but we know that we can do much better. We can be much bigger,” he said.
“It is interesting to know that Africa has nine unicorns, and five of them are in Nigeria. So we know that the possibilities are even bigger.”
Oyedele assured investors and fintech operators of the government’s commitment to maintaining policy consistency and providing regulatory support to encourage further investment and expansion.
“We welcome you to Nigeria. We want you to do more, and we are willing, from the government’s side, to work with you,” he added.
The proposal comes amid expectations of rapid growth in Africa’s cross-border payments market over the next decade. Industry reports project the market will expand significantly as fintech adoption rises, mobile money usage grows, and intra-African trade increases under AfCFTA.
Despite the growth prospects, stakeholders say cross-border payments across Africa continue to face challenges including fragmented financial systems, multiple currency conversions, high transaction costs and settlement inefficiencies.
The merger between Providus Bank and Unity Bank has entered the integration phase following the completion of all legal and regulatory requirements, setting the stage for the emergence of ProvidusUnity Bank Limited.
Recall that the Supreme Court upheld the merger scheme, ordering all of Unity Bank’s assets and liabilities to be transferred to Providus Bank.
The enlarged institution operates as a national commercial bank.
Providus Bank in a statement to customers formally notified them of the announced the successful completion of the legal process backing the merger and assured them that banking operations would remain seamless throughout the integration period.
“We are pleased to announce the final court sanction of the merger between ProvidusBank and Unity Bank. This business combination is set to create a strong institution with broader national reach, deeper capabilities and an even greater commitment to delivering exceptional banking experiences to you,” the bank stated.
According to the bank, the merger marks a significant milestone that will strengthen its capacity to serve customers through improved access to banking services, enhanced technology infrastructure, stronger digital capabilities and expanded product offerings.
“This merger represents an important milestone in our journey and positions us to serve you better through expanded access, enhanced technology infrastructure, improved digital capabilities, improved product offerings, and a wider network of service channels across Nigeria,” the bank said.
Providus Bank also assured customers that the transition would not affect their banking relationship, stressing that all accounts and existing service channels would remain fully operational during the integration process.
“Your banking relationship remains secure and uninterrupted,” the bank assured customers, adding that they would continue to enjoy access to their accounts and banking services through existing channels while integration activities progress.
The bank further noted that customers should expect improved service delivery arising from the merger, supported by stronger capabilities and a wider operational footprint across the country. It added that any actions required from customers during the transition would be communicated clearly and in advance.
Highlighting the strategic importance of the combination, the bank said the next phase of its evolution is geared towards building a stronger institution capable of supporting economic growth while maintaining high service standards.
“This next chapter reflects our commitment to building a stronger institution for customers, supporting economic growth and continuing to deliver the service standards you expect from us,” it stated.
Economic and Financial Crimes Commission (EFCC) and the Corporate Affairs Commission (CAC) have expressed concern over the growing activities of unregistered Point of Sale (POS) operators and warned that they pose significant risks to businesses, the financial system and national security.
The concern was raised on Thursday in Abuja when Senator Ibrahim Adah, chairman of the CAC Board, led a delegation of the commission’s management staff on a courtesy visit to Mr Ola Olukoyede, executive chairman of the EFCC, at the anti-graft agency’s headquarters.
Adah disclosed that only about 20 per cent of POS operators in Nigeria are currently registered with the CAC, describing the situation as a violation of the Companies and Allied Matters Act (CAMA) 2020 and the Central Bank of Nigeria’s Agent Banking Regulations 2026, which require businesses operating under business names to be duly registered.
He appealed for stronger collaboration between both agencies to enforce compliance and develop a reliable database of POS operators for law enforcement purposes.
According to him, emerging evidence indicates that criminal proceeds, including ransom payments from kidnapping activities, are sometimes channelled through POS terminals.
“We seek closer cooperation in developing a reliable database of POS operators for use by the EFCC and other law enforcement agencies,” Adah said.
He noted that the visit was part of efforts to strengthen partnerships with institutions whose mandates intersect with that of the CAC, particularly in combating financial crimes.
The CAC chairman stressed that the two agencies could not effectively tackle economic and financial crimes in isolation, especially those involving corporate entities.
“When companies are misused for fraud or money laundering, the mandates of both institutions are directly affected. Neither of the two agencies can therefore fight and win the war against economic and financial offences if we work alone,” he said.
Adah identified data and intelligence sharing, public sensitisation on financial risks, and staff capacity building as critical areas for deeper collaboration, reaffirming the CAC’s commitment to protecting the integrity of Nigeria’s financial system.
Responding, Olukoyede described the activities of unregulated POS operators as a major challenge to the country’s financial ecosystem.
“If you do not regulate the activities of such key players, you will be having major problems and challenges within your financial ecosystem,” he said.
The EFCC chairman assured the CAC of the commission’s readiness to strengthen cooperation in tackling economic crimes and promoting regulatory compliance.
He described the CAC as the gateway to economic growth in Nigeria, noting that foreign investors often have their first engagement with the country through the commission.
Olukoyede revealed that the EFCC had established a dedicated desk to handle matters relating to the CAC and disclosed that the commission was currently investigating about 200 companies referred to it by the corporate regulator.
“As a matter of fact, I think we have about 200 companies that you forwarded to us that we are currently investigating and we have made reasonable progress.
“We have made very interesting discoveries, which will help you when you lay your hands on the report,” he said.
He added that many public corruption cases handled by the EFCC involve procurement and contract fraud perpetrated through companies registered by the CAC.
Olukoyede also underscored the need for both agencies to address insider-related challenges and improve internal accountability mechanisms.
On information sharing, he directed officials of both organisations to review and update their existing Memorandum of Understanding to reflect current realities, particularly regarding beneficial ownership information and data protection.
The renewed partnership, according to both agencies, is aimed at deepening corporate compliance, enhancing transparency and safeguarding the integrity of Nigeria’s financial system.
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