In a move that has sparked widespread discussion, Dangote Petroleum Refinery & Petrochemicals has taken a bold step to reduce fuel prices for Nigerians by absorbing a N16 billion loss. This decision, which involves refunding N65 per litre to oil marketers who previously bought at a higher rate, has led many to ask: Is Dangote now subsidizing fuel?
The answer is both yes and no—while Dangote is indeed lowering prices by absorbing losses, this is fundamentally different from the government-funded subsidy system that Nigerians were familiar with before its removal by President Bola Ahmed Tinubu.
Understanding the Two Forms of Subsidies
There are two main ways fuel prices can be subsidized:
-
Government Subsidy: This involves the federal government using public funds to artificially lower fuel prices, paying the difference between the actual cost of importation or production and the price at which Nigerians buy fuel. This system, while keeping fuel cheap, has historically been associated with corruption, inefficiency, and massive financial burdens on national revenue. In 2022 alone, Nigeria spent over N4 trillion on fuel subsidies, an amount that could have been used for infrastructure, healthcare, and education.
-
Private Sector Price Absorption: What Dangote Refinery is doing is a different approach. The company is not receiving public funds to subsidize fuel. Instead, it is absorbing losses from its own profits to ensure that fuel prices remain competitive and affordable. This is a market-driven strategy aimed at supporting business partners and ensuring that Nigerians benefit from reduced fuel costs.
The Dangote Strategy: Absorbing N16 Billion for Cheaper Fuel
On February 27, 2025, Dangote Refinery adjusted its ex-depot price of Premium Motor Spirit (PMS) from N890 per litre to N825 per litre. However, recognizing that many oil marketers had already bought stock at the old price, the company decided to refund N65 per litre, ensuring that these marketers would not suffer losses.
This move applies to over 200,000 metric tonnes of fuel previously sold at the higher rate. The refund ensures that fuel retailers pass on the benefits of the price reduction to consumers, allowing Nigerians to access fuel at a more affordable price.
Ensuring Fair Pricing for Consumers
To prevent any form of price exploitation, Dangote Refinery has urged Nigerians to report any fuel station selling above the new expected rates. The company has specifically mentioned that consumers who buy from marketers such as Ardova Plc (AP), Heyden, and MRS Oil and pay above the adjusted price can lodge complaints with Dangote Refinery and receive refunds for the excess amount.
This transparency aims to ensure that the benefits of the new pricing truly reach ordinary Nigerians and are not hoarded by middlemen or marketers looking to maximize profits at the expense of consumers.
A Strategic Move in Line With Economic Growth Goals
Dangote’s intervention aligns with President Bola Ahmed Tinubu’s Renewed Hope Agenda, which seeks to stabilize Nigeria’s economy and support local industries. By ensuring that Nigerians enjoy cheaper, high-quality fuel, Dangote Refinery is proving that market forces—not government subsidies—can still work in favor of the people when businesses prioritize economic growth over profit maximization.
While this N16 billion intervention is a temporary relief, it demonstrates how local production, competitive pricing, and corporate responsibility can help mitigate the high cost of fuel without resorting to government-funded subsidies that have drained Nigeria’s economy in the past.