Experts assess fuel pricing crisis as Tinubu’s naira policy targets cartel

Nigeria is once again grappling with a fuel pricing crisis, but this time, experts argue, the government’s approach might permanently alter the dynamics of the sector.

For decades, the country has subsidized fuel prices, creating what experts describe as an unsustainable “false economy.”

According to Dr. Ayo Ige, an oil and gas analyst, Nigeria’s fuel subsidies benefited criminal networks across West and Central Africa, with billions lost to smuggling and corruption. “We’ve been subsidizing not just our citizens, but large parts of the region, all at a massive cost,” Ige noted.

The Dangote Refinery (DR), expected to be a game-changer, is currently working with imported crude, which has led to the current high prices. However, the supply of Nigerian crude to DR is set to begin on October 1st, with transactions denominated in naira.

Experts like Dr. Adamu Usman, an economist, view this as a strategic decision. “It’s a smart move by President Tinubu. By denominating these transactions in naira, we’re not only stabilizing domestic pricing but also taking a stand against the dollar-dominated fuel market,” Usman explained.

This September, crude imports were paid for in dollars to alleviate scarcity, but the Nigerian National Petroleum Company Limited (NNPCL) is currently the only entity with the financial capacity to manage such large transactions. Independent marketers have been strained by the dollar-based imports, with many vessels awaiting clearance to offload fuel.

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“It’s not just about supply,” said Kehinde Ogunbiyi, an industry consultant, “there’s a serious financial and storage bottleneck, but once DR scales up production, it will ease.”

Despite ongoing challenges, Tinubu’s naira policy for crude oil pricing is being hailed by experts as a potential long-term solution to Nigeria’s fuel market volatility. By gradually moving away from the subsidies that once fueled corruption and inefficiency, the administration is taking bold steps to stabilize prices.

Dr. Ige sees the naira-denominated system as a blow to the entrenched cartels controlling Nigeria’s fuel imports, saying, “This disrupts the mafia’s grip on the market. For years, these networks thrived on subsidies and arbitrage.”

Yet, industry insiders warn that global factors will continue to influence domestic fuel prices for the foreseeable future. “Fuel pricing in Nigeria will fluctuate like it does globally. We’re still a mono-economy, and until we diversify, the market will remain vulnerable to external shocks,” Usman cautioned.

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On the positive side, fuel scarcity is expected to be a thing of the past in the coming months as DR ramps up production. President Tinubu’s economic reforms have already reduced Nigeria’s debt servicing from 97% to 68% of revenue in one year, a feat that many financial experts call “remarkable.”

As DR gains momentum, experts emphasize the need for protection against potential sabotage, calling it a “strategic national asset.” Dr. Ige issued a stark warning: “Sabotaging DR would be a disaster for the economy. It must be safeguarded at all costs.”

While the road ahead may be challenging, experts remain cautiously optimistic that Nigeria’s fuel pricing crisis could soon evolve into a more stable system, driven by homegrown production and financial reforms.