In a major shift for Nigeria’s energy economy, the landing cost of Premium Motor Spirit (PMS), or petrol, has dropped to ₦852 per litre as of April 15, 2025, according to MEMAN. This change is expected to influence downstream pricing, even as local dynamics continue to shape market outcomes.
Petrol landing cost refers to the total amount required to import and deliver petrol to Nigerian ports. It includes the international product price, freight charges, insurance, port levies, and other logistical costs. In Nigeria’s deregulated fuel market, landing cost is a key determinant of the final pump price.
Global crude oil prices at multi-year lows
One of the most significant drivers of this drop is the continued decline in global crude oil prices. Brent crude, the benchmark used globally, fell to $61.77 per barrel in early April 2025, its lowest in years. This represents a sharp decline from $84 per barrel in mid-2024, with prices driven downward by several global developments.
The oil price slump has been linked to increased production output from OPEC+ countries and heightened geopolitical trade tensions, particularly the reintroduction of import tariffs by the U.S. under President Donald Trump. These measures triggered a slowdown in demand and created excess supply, forcing crude prices downward.
Since refined petroleum products like petrol are priced based on crude oil, a lower global crude benchmark leads to cheaper petrol on the international market. This directly reduces the base cost used to calculate Nigeria’s landing cost, even before accounting for local logistics or exchange rates.
The Crude Oil Refinery Owners Association of Nigeria (CORAN) recently projected that with sustained global prices around $50–$60 per barrel, Nigeria could potentially see PMS prices drop closer to ₦700 per litre if supply and exchange conditions are favourable.
Exchange rate challenges persist
The impact of lower oil prices is being partially offset by a weakening naira. The dollar-to-naira rate has dropped from ₦1,429 in February to ₦1,553 in April 2025. Because international oil transactions are denominated in dollars, Nigeria still needs more naira to purchase the same quantity of petrol.
However, the drop in dollar-based fuel prices has managed to override the naira’s fall at least for now. The Central Bank of Nigeria (CBN) intervened in early April by injecting $197.71 million into the forex market to slow further devaluation. But exchange rate pressures remain a long-term concern for petrol pricing.
Naira-for-crude policy provides relief
Nigeria’s naira for crude exchange policy, launched in 2024, has played a key role in reducing reliance on dollars. The initiative allowed local refineries especially the Dangote Refinery to buy crude oil in naira rather than in foreign currency.
This helped reduce importation needs and strengthened Nigeria’s refining independence. Although the programme experienced a pause in March due to supply issues, its renewal in April by the Federal Executive Council has brought a degree of price stability. Dangote’s ex-depot pricing has hovered between ₦865 and ₦880, contributing to the average drop in overall petrol landing costs.
Competition among downstream players
The arrival of the Dangote Refinery into Nigeria’s supply chain has added healthy pressure on other marketers. NNPC, the national oil company, slashed prices in March to ₦860 per litre to keep up with competition. This commercial rivalry has played a subtle but important role in encouraging efficient pricing structures across the sector.
Implications for pump price and inflation
While Nigerians are hopeful that this cost reduction will lead to cheaper pump prices, the relationship is not always linear. In the first two weeks of April, depot prices in Lagos rose from ₦860 to ₦900, showing how other factors such as transport logistics, margins, and speculative pricing influence retail outcomes.
Nonetheless, lower landing costs create the foundation for improved consumer pricing. If logistics bottlenecks ease and forex stabilises, pump prices could drop from the current average of ₦940–₦1,000 to ₦850–₦900 in coming weeks.
Fuel prices also influence inflation. Reduced costs for petrol often translate to lower transport fares and reduced costs of goods and services. Any relief in pump prices, even marginal, will help businesses and working Nigerians who face high daily expenses.
Foreign exchange and regional effects
Nigeria’s ability to maintain lower fuel costs also affects West African neighbours. Niger Republic, for instance, saw its average pump price fall from ₦10,000 to ₦5,000 in March 2025 due to increased petrol supply from Nigeria. This underscores Nigeria’s growing influence as a fuel supplier in the region.
However, if Dangote and other refiners shift back to dollar-based transactions due to crude shortages or policy reversals, forex demand could spike again, weakening the naira and pushing landing costs back up.
What must be addressed going forward
Despite these encouraging signs, Nigeria must address persistent risks:
- Ensure consistent crude supply to local refineries
- Maintain stable foreign exchange rates
- Reduce market inefficiencies driven by middlemen
- Secure pipelines and eliminate oil theft
- Institutionalise the naira-for-crude policy
Investment in storage, pipelines, and distribution systems will also be crucial in lowering the cost of moving fuel from port to pump. Policymakers must focus not only on lowering landing costs but also on eliminating the structural challenges that prevent Nigerians from enjoying the benefits.
The drop in petrol landing cost to ₦853 per litre reflects a combination of favourable global oil prices, domestic policy action, and improved local refining capacity. It presents a critical opportunity for the government to stabilise pump prices, ease inflation, and deepen Nigeria’s energy independence. But without a consistent policy environment, currency stability, and investment in infrastructure, the gains may prove temporary.
For now, Nigerians wait and watch, hoping the figures at the depots soon translate into relief at the filling stations.
