Imported petrol is cheaper than Dangote fuel -World Bank

The World Bank has stated that imported petrol is about 12 percent cheaper than fuel supplied by Dangote Petroleum Refinery.

The World Bank noted that the price differences reflect distortions in the domestic price structure amid soaring global crude oil prices.

This was contained in the latest Nigeria Development Update released in Abuja on Tuesday, which noted that the current price structure has created a gap between the price of locally refined fuel and the price of imported equivalents.

“The Dangote refinery—a major supplier of refined petrol after the regulator stopped issuing import permits in early 2026—raised the ex-depot price of Premium Motor Spirit to about N1,275 per liter on March 23, 2026, compared with the estimated import parity price of about N1,122 per liter, implying a cost difference of about 12 percent,” the report said.

In the report, the World Bank warned that the ongoing spike in global oil prices could directly add about 3.1 percentage points to Nigeria’s headline inflation, as rising fuel prices impact the economy.

The World Bank highlights the growing gap between locally refined fuels and imported fuels as a major factor driving inflationary pressures in the downstream sector.

The World Bank said these developments reflected broader pressures in energy markets following the Middle East conflict, and warned that a rise in oil prices to around $80 a barrel—which is a 31.1 percent increase over pre-conflict levels—could significantly exacerbate inflationary pressures.

“Overall, an increase in oil prices to about $80 per barrel… would directly add about 3.1 ppts to headline inflation under pass-through assumptions,” the report states, noting that the indirect impact of rising fuel prices on transportation, logistics, and food prices could push inflation even higher.

Energy-related components, such as transportation, account for about 10.1 percent of the Nigerian Consumer Price Index basket, meaning fuel price shocks quickly spill over to broader price levels. “In addition to rising energy prices, this conflict is also likely to put pressure on food prices, because rising global food and fertilizer prices will impact domestic inflation,” the report added.

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Speaking at the launch of the report in Abuja, World Bank Director for Nigeria, Mathew Verghis, said the report was released amidst improving macroeconomic conditions, but with increasing global risks. “Nigeria’s macroeconomic fundamentals will continue to improve through 2025 and into early 2026… the stabilization reforms implemented by the government since mid-2023 continue to produce results,” he said.

He noted that although inflation showed a slight decline in January and February, the ongoing Middle East conflict posed new risks. “Higher global energy prices and rising shipping costs are putting pressure on domestic prices… we are already seeing this in domestic fuel prices,” Verghis said, noting that petrol prices rose sharply while diesel prices almost doubled at the end of March.

He warned that these pressures would continue to affect the economy. “This is expected to continue to affect food prices and other prices, and this is already starting to happen,” he said.

Verghis also highlighted that although higher oil prices could increase government revenues, the benefits would still be limited. “As a net oil exporter, Nigeria’s fiscal and external balance will benefit, although the benefits will be limited,” he said, stressing that reducing inflation remains critical to improving living conditions.

“Reducing high inflation is perhaps the single quickest way to allow people to experience the benefits of reform… even at 15 percent, inflation has reduced purchasing power significantly,” he said.

He emphasized that structural measures—reducing trade barriers, easing supply constraints, and providing targeted support to vulnerable households—are critical to reducing price pressures.

On growth, Verghis said, “Real progress… will require faster, more sustainable growth that generates more jobs,” citing energy, infrastructure and fiscal reform as top priorities.

He also highlighted early childhood development as the foundation for long-term economic prosperity. “If Nigeria is to achieve high-income status… the most important investment that must be made is in early childhood,” he said, warning that the current results “must be treated as a crisis.”

The World Bank’s Lead Economist for Nigeria, Fiseha Haile, noted that although Nigeria’s economy has strengthened and remains resilient, rising global risks, particularly from Middle East conflicts, could impact inflation.

“PMS prices have increased by more than 50 percent since the start of the conflict… and this is impacting prices directly and indirectly,” Haile said, adding that higher energy costs translate into broader price pressures across the economy.

He also cited improvements in the external sector, stating that “state reserves have increased significantly, the exchange rate system has been unified, and exchange rate volatility has decreased,” while warning about risks from weakening capital inflows and tighter global financing conditions.

Regarding fiscal performance, Haile said gross revenues have increased, but spending pressures remain, contributing to a slight widening of the fiscal deficit to around 3.1 percent of GDP in 2025.

Looking ahead, he projects “growth [will be] around 4.2 percent in the medium term between 2026 and 2028,” but warned that the risk of inflation remains a major concern and could erode improvements in prosperity.
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