The World Bank has revealed that imported petrol is currently about 12 per cent cheaper than fuel supplied by the Dangote Petroleum Refinery, highlighting distortions in Nigeria’s domestic fuel pricing amid rising global crude oil costs.
The revelation comes in the Bank’s latest Nigeria Development Update, launched on Tuesday in Abuja, which noted that the pricing gap between locally refined petrol and imported fuel has created significant inflationary pressures in the downstream sector.
According to the report, Dangote Refinery, the country’s main supplier of refined petrol following the cessation of import licences in early 2026, raised the ex-depot price of Premium Motor Spirit (PMS) to approximately N1,275 per litre as of March 23, 2026. In comparison, the estimated import-parity price stood at about N1,122 per litre, reflecting a 12 per cent cost differential.
The World Bank warned that the ongoing surge in global oil prices, particularly due to the Middle East conflict, could add around 3.1 percentage points to Nigeria’s headline inflation.
Energy-related sectors such as transport, which account for roughly 10.1 per cent of the Consumer Price Index basket, are particularly sensitive to fuel price shocks, which quickly ripple through the broader economy.
“An increase in oil prices to about $80 per barrel—a 31.1 per cent rise relative to pre-conflict levels—would directly add roughly 3.1 percentage points to headline inflation under a full pass-through assumption,” the report stated. It further noted that indirect effects from higher fuel costs on transport, logistics, and food prices could push inflation even higher.
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World Bank Country Director for Nigeria, Mathew Verghis, said the report was released amid improving macroeconomic conditions, but warned that rising global risks could undermine progress.
“Nigeria’s macroeconomic fundamentals continue to improve through 2025 and into early 2026, with government stabilisation reforms delivering dividends. Yet higher global energy prices and rising shipping costs are exerting pressure on domestic prices,” he said.
Verghis highlighted that petrol prices have surged sharply while diesel nearly doubled by the end of March, adding that these pressures are expected to feed into food and other essential prices. He stressed that while higher oil prices may boost government revenues, the benefits are constrained, and reducing inflation remains central to improving living conditions.
“Reducing high inflation is probably the single fastest way to allow people to feel the benefits of reforms… even at 15 per cent, inflation is reducing purchasing power in a significant way,” Verghis said.
He called for structural measures such as reducing trade barriers, easing supply constraints, and targeted support for vulnerable households to help ease price pressures.
On growth prospects, he emphasised the need for “faster and sustained job-rich growth” through reforms in energy, infrastructure, and fiscal policy. He also stressed the importance of early childhood development as a cornerstone for long-term economic prosperity.
World Bank Lead Economist for Nigeria, Fiseha Haile, noted that while the Nigerian economy has strengthened and shown resilience, global risks could intensify inflationary pressures. “PMS prices have already increased by over 50 per cent since the start of the conflict, affecting both direct and indirect prices across the economy,” she said.
Haile also highlighted gains in the external sector, including improved reserves, a unified exchange rate system, and reduced currency volatility, while cautioning about risks from weaker capital inflows and tighter global financing conditions.
On fiscal performance, she noted that gross revenues have risen, but spending pressures contributed to a slight widening of the fiscal deficit to about 3.1 per cent of GDP in 2025.
Looking ahead, the World Bank projects medium-term growth of around 4.2 per cent between 2026 and 2028 but cautioned that inflation risks remain a major concern that could erode welfare gains.