The World Bank is deeply troubled by the plight of Nigerians, especially those toiling below poverty line. The bank’s recent update on Nigeria’s economy showed poverty rate inching up by close to three per cent.
Nigeria’s poverty rate now stands menacingly at 63 per cent. The bank warned that 140 million Nigerians toil below poverty line. Nigeria snatched the inglorious toga from India in 2018. Right now, the bank rates Nigeria derisively as the world headquarters of poverty.
With poverty surging to 63 per cent that euphemism sticks.
The World Bank lamented that even as inflation dropped to 15.15 per cent, double digit inflation rate, no matter how low, remains an agony on Nigerians. The bank traced the surging poverty rate to the menace of double digit inflation. It warned that inflation was depleting the value of the naira in consumers’ pocket and consequently tormenting manufacturers and service providers with low patronage emanating from consumers’ inability to back up their demands with purchasing power.
The bank encouraged the federal government to tackle inflation. It highlighted the dangers on the economy by the rising pump prices of refined petroleum products as a result of the crude oil supply fears triggered by the war in the Middle-East.
The pump price of petrol has risen from N860 to N1,300 per litre as crude oil price crossed the $100 threshold. Aviation fuel now sells for N3,000 per litre.
The World Bank expressed its worries about the inflationary trend of the spike in the pump prices of fuel since the war started. That development has pushed food inflation back to double digits as the cost of food haulage doubles with the spike in the pump prices of fuel.
The bank therefore recommended a rather ominous solution to the spike in petrol price. It warned that Dangote Refinery has established a monopoly in the supply of refined petroleum products in Nigeria and that the development was inimical to free determination of the pump prices of the products. It therefore called on the federal government to break the Dangote Refinery monopoly by issuing licenses to importers to bring in imported petrol.
Pundits are infuriated by the advice of the World Bank, but the federal government has implemented it anyway. Last week an armada of ships with refined petroleum products besieged Apapa Port.
They were laden with fuel brought in with the license issued by the regulator of the downstream sector of the oil industry.
Technically, the World Bank is right to advise the federal government to break Dangote monopoly over Nigeria’s refined petroleum products market. The bank argued justifiably that consumers were paying the price of the monopoly. And that is the gospel truth. The landing cost of imported petrol is N153 per litre cheaper than the one supplied by Dangote Refinery.
It is equally true that what is happening is what the regulators of the downstream sector of the oil industry schemed for. The regulator worked assiduously to ensure that Dangote Refinery operates at very high production cost so that its product will be more expensive than imported ones. That has been achieved at last. Dangote Refinery needs 19.5 million barrels of crude oil monthly to operate at full capacity.
The Nigerian National Petroleum Company Limited (NNPCL) supplies the refinery a paltry 5 million barrels of crude oil monthly. Dangote imports more than 14 million barrels of crude oil monthly. The Central Bank of Nigeria (CBN) noted that Dangote Refinery imported crude oil worth $3.6 billion in 2025.
That is when it was operating at less than 50 per cent of installed capacity. Now that it is operating at the full capacity of 650,000 barrels per day, it may spend close to $10 billion on crude oil imports.
The worse part of the tangle is that Dangote buys Nigerian crude oil in the international market at a premium of $18 per barrel and ships it back home at an additional cost. That explains why the costs of its refined petroleum products are higher than that of imported ones.
The irony of the whole tangle is that the World Bank demand for imported petrol cannot bring down its pump price for embattled consumers.
The bank’s advice will require that the regulator of the downstream sector of the oil industry operates two sets of pump prices of petrol: one for Dangote petrol and the other for imported petrol.
NNPCL has never operated two set of pump prices. When the four refineries owned by government were chipping in a few million litres of petrol daily, NNPCL supplemented their products with imported petrol but sold both at the same pump price even as local petrol was reaching the pumps at half the price of imported petrol.
NNPCL would sell at the average of the two prices. That is what it is doing at the moment. The consumers that the World Bank wants to protect are defenceless under NNPCL scheme.
There are fears that the World Bank may not be entirely honest in its call on the federal government to import petrol at a time when Dangote Refinery supplies 60 million litres of petrol daily to the domestic market.
Economists tackling the World Bank on its advice contend that the bank is determined to protect the refineries in Europe at the expense of Dangote Refinery.
The bank’s advice does not reflect the fact that petrol importation will deplete Nigeria’s lean foreign reserves. That is the ambivalence of the bank’s advice.
Dangote angrily warned that it will be exporting all its refined products if the federal government issues licenses for petrol imports. Government dared the refinery, but it is still supplying the domestic market.
Ironically, Nigeria will be the loser in a full-fledge showdown with Dangote Refinery.
About $20 billion will be wasted annually on refined petroleum products imports. Dangote Refinery is an invaluable asset to Nigeria’s economy. Even if it carries out its threat to export all its refined petroleum products, it will be raking $30 billion annually into Nigeria’s foreign reserves.