The continued rise in petrol prices across Nigeria has renewed questions about how the cost of Premium Motor Spirit (PMS) is determined in the country’s deregulated downstream petroleum market.

While factors such as crude oil prices, exchange rates, transportation costs and supply conditions influence petrol prices, concerns remain over how much each component contributes to the final price paid by consumers.

The issue has become more prominent following recent increases in the ex-depot price of petrol from the Dangote Petroleum Refinery.

Between August 21 and September 12, 2026, the refinery reportedly increased its petrol gantry price four times, moving from ₦1,165 to ₦1,350 per litre. This represents a 15.9 per cent increase within 22 days.

By mid-September, retail petrol prices in cities including Abuja, Lagos and Ibadan were reportedly between ₦1,400 and ₦1,450 per litre.

Questions Over Petrol Price Formation

The gap between refinery-gate prices and retail pump prices has raised questions about the various costs and margins added throughout the supply chain.

The Major Energy Marketers Association of Nigeria estimated petrol landing costs at ₦1,311.36 per litre on September 8. At the time, Dangote Refinery’s gantry price was ₦1,265 per litre before it was subsequently raised to ₦1,350.

The figures represent different stages of the petroleum supply chain, but the changes have increased calls for greater transparency regarding crude acquisition costs, exchange rates, logistics expenses and commercial margins.

The debate is particularly significant because Dangote Refinery has become an increasingly important source of locally refined petrol.

NNPC, Foreign Exchange And Import Costs

The Nigerian National Petroleum Company Limited has also faced scrutiny over the financial implications of petrol imports and pricing.

According to figures cited from the Nigeria Extractive Industries Transparency Initiative, NNPC imported 14.53 billion litres of Premium Motor Spirit in 2023 at a cost of ₦6.74 trillion and generated ₦3.73 trillion in revenue.

The resulting ₦3.01 trillion gap was attributed to the difference between regulated pump prices and actual import costs at the time.

Exchange-rate movements have also affected petroleum costs because several inputs within the supply chain are linked to foreign currency.

However, the article argues that changes in the exchange rate should be reflected through clear and verifiable calculations, allowing consumers to understand how currency movements affect pump prices.

Domestic Crude Supply Remains A Concern

Another issue affecting the downstream sector is the availability of crude oil for local refineries.

Data from the Nigerian Upstream Petroleum Regulatory Commission indicated that 61.9 million barrels of crude were allocated to domestic refineries in the early part of 2026, while only 28.5 million barrels were reportedly delivered.

The shortfall was linked to pricing differences between crude producers and refiners under the willing-buyer, willing-seller arrangement.

Limited access to domestic crude can force refineries to explore alternative supplies or operate below capacity, potentially increasing costs across the petroleum value chain.

Calls For Stronger Consumer Protection

Although petrol prices are determined by market forces under deregulation, regulatory agencies continue to have responsibilities relating to competition, consumer protection and market transparency.

The Federal Competition and Consumer Protection Commission had earlier raised concerns in June 2026 over the pace at which retail petrol prices responded to declines in global crude oil prices.

The commission does not set petrol prices, but its intervention highlighted questions about how quickly changes in international crude prices are transmitted to Nigerian consumers.

Stakeholders are therefore calling for greater disclosure of the factors behind petrol price adjustments.

The Nigerian Midstream and Downstream Petroleum Regulatory Authority, the Nigerian Upstream Petroleum Regulatory Commission and NNPC all have different roles within the petroleum sector, including market regulation, crude supply oversight and commercial operations.

For consumers, the central issue remains understanding how the figures are calculated and why prices change.

As petrol prices continue to place pressure on households and businesses, clearer information about refinery costs, crude supply, exchange rates, transportation expenses and retail margins could provide Nigerians with a better understanding of the forces shaping pump prices.

Source: Reporters At Large / Lanre Ogundipe