How Dangote Refinery will drive down Petrol Prices in Nigeria, Analyst Explains

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Nigeria is expected to witness a significant reduction in petrol pump prices in the coming weeks, driven by the increasing impact of the Dangote Refinery’s strategic operations. According to Ifeayi Ubah, Head of Investment Research at Comercio Partners Limited, the refinery’s price adjustments are a direct response to international market trends.

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“For the Dangote Refineries slashing prices, he’s just following what the international prices are. So, we saw the international prices go down the time Dangote slashed prices,” Ubah said in an interview on ARISE TV. The analyst’s projection is rooted in Nigeria’s evolving position in the global petroleum market, as the country transitions from relying heavily on imported finished products to becoming a prominent exporter.

This shift is expected to significantly reduce the drain on Nigeria’s foreign exchange reserves, which previously went towards fuel imports. Ubah also noted that another refinery, Buharabi, being established in the South-South region, could further boost domestic supply and potentially lead to a surplus of petroleum products

Despite the volatility in global energy prices, Ubah stressed that the long-term impact of local refining capacity would override temporary fluctuations. “Despite recent movements in international crude oil prices… the domestic market is poised for stability,” he said.

Ubah also highlighted the benefits of Dangote’s integrated approach, which includes engaging with depots, terminals, and tank farms. “This integrated approach… is seen as empowering the refinery with more financial leverage,” he added.

Regarding the pump price, Ubah confidently stated, “In the next few weeks, I expect to see a downward reduction on how much we buy petrol.” He concluded that if this anticipated price drop does not materialize, political factors might be at play. The analyst’s sentiment underscores a belief that increased local refining and market competition will ultimately benefit the average Nigerian consumer, leading to more affordable fuel

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