Business
World Bank can’t dictate to Nigeria on fuel subsidy removal –Chaudhuri
The Country Director, World Bank, Shubham Chaudhuri, speaks on major issues affecting the Nigerian economy.
Is the country investing enough in infrastructure to realise its potential?
Nigeria has so much potential but it has not been realised. To realise the potential, there must be investments in capital infrastructure and in basic development needs. Right now, Nigeria does not have the revenues to finance it. We have seen in some reports that Nigeria has the lowest level of government revenue to GDP among some major countries, but we have some other countries too. But if you compare them to the rule of thumb on how much the government needs to spend in order to provide the basic functions of law and order-basic services and basic infrastructure-the rule of thumb is usually between 15 per cent and 20 per cent. Nigeria, in the last few years, has been spending about 12 per cent of the GDP. It means if your revenue is seven to eight per cent of the GDP, and you are making an effort to spend about 12 per; you are already encouraging fiscal deficit which means an overall debt. However, that might be worth it if the public spending is in the right places. Nigeria has huge potential and we see this potential in two ways. Nigeria is the largest economy in sub-Saharan Africa, and you see the dynamism and the energy of the people. And if things were a bit more conducive to mobilising the energy, the potential is tremendous. I also see in it terms of Nigerians in the Diaspora-Nigerians who grow up in Nigeria and then at an individual level go abroad. In the United States, Nigerians are the most educated. It used to be the Indians but Nigeria has overtaken India in that regard.
What, in your view, is affecting the growth of the country’s per capita income?
In the last 40 years, the real per capita income has been inflation-adjusted, and per capita income in Nigeria has not grown. What it was in 1981, 1982 is what it is now in 2021, 2022. That doesn’t mean there was no time the per capita income has grown up; and most of that is related to oil price movement. But over the long run, in the last four decades, it is like four lost decades. Now the population is much higher, insecurity is much more widespread, and this year and last year, the oil price is going up. Even with what is happening in Ukraine, the oil price is no longer the boom.
How do you expect the Dangote Refinery to impact the country’s revenue when it fully commences?
Refining or the ability to refine petroleum products domestically will be great from an economic perspective – in terms of increasing domestic value-added- and will also have some job creation spillovers. It is not a solution to the physical problem of PMS subsidy, for the simple reason that it is still going to be a choice; that is if the refined products can be sold at the world price. For the refinery not to sell it at the world price, but to sell at the subsidised price, means that the government is still spending a lot. So the fiscal choice will remain and it is a choice for Nigeria to determine whether government revenues are better spent towards subsidising versus reducing the number of out-of-school children, versus reducing the number of children who die before the age of five, which Nigeria is also leading in the world. It would help on the economic front in terms of value-added.
Would subsidy have any impact on local refining of oil?
Do we want the domestic refinery, whether it is private or public, to sell PMS at a subsidised price when they could sell at the world price? The choice for Nigeria is that this state refinery could sell PMS at the world price, bringing all these revenues with them. The government can decide whether it could put that towards subsidising the PMS, or could put it on healthcare, basic education, electricity excess, and better roads. If it is a private refinery, since we have a large one coming on the line, the refinery would certainly or not be willing to sell at a subsidised price without being compensated by the government. So the fiscal choice does not go away. This is one of the things that are seen in the media where domestic refining is seen as a solution to the fiscal problem. It is not the solution to the fiscal problem. It is certainly in terms of domestic value-added, in terms of the economic benefits.
Do you expect the local refinery to bring huge benefits in terms of export?
The dependence on imports is the same thing. The dependence on import means that you are using up assets. The refineries can sell refined petroleum products globally, and by the way, the crude oil that Nigeria produces, if it goes directly to the domestic refineries, that means you are not earning FX from selling the product. So both on the foreign exchange and on the fiscal front, the choice does not go away. It is still a policy choice. If I have a domestic refinery that is producing 20 million litres a day of petroleum (PMS), I can export that at the world price, or I can sell it domestically at the world price, or I can sell it domestically at the subsidised price. If I sell it domestically at the subsidised price, that means that it is a conscious choice that I do not want to earn foreign exchange revenue from exporting, which is fine. But if you say I am going to sell it domestically at the subsidised price, you are also saying that the revenue is better used for subsidising PMS. The domestic refinery can sell at the world price, the federation gets the revenues and could use the revenues for education. So, it all comes to a choice. It is not by having the domestic refineries come online that the choice will be well. Either when it comes to FX availability or in terms of the fiscal cost, the clear benefits from the rest of the refinery are that it has huge benefits in terms of job creation and value-added. That is the reason domestic refinery capacity should be strengthened, but people think that having a domestic refinery would somehow take away the choice. You will still be losing N5tn this year in potential revenue, by abiding with the cost of PMS right now, because of where the crude oil price is. That cost will not go away because of domestic refining.
What is the implication of Ukraine/Russian war on the global economy?
It depends on whether it escalates further or continues or is more limited. The clear implication suddenly that we have seen is the rise in the prices of crude oil and gas. And I think that, for many of the advanced economies that inflation was getting ahead with, it would mean the tightening of monetary policies. It could also have some implications for global trade. In general, it could mean that the pace of economic activities globally is likely going to be a bit more moderate as being done before the crisis. My sense is that from everything that we have seen, they are likely to be more moderate than that.
What is the impact of the war on Nigeria?
Coming to Nigeria, you look at two main aspects. What it means for oil prices or energy prices including natural gas, and in terms of the willingness of portfolio investors or others to invest in Nigeria. On the global capital flows, investors’ kind of appetite in terms of investing in an emerging market is going to go down because of rates. It is not only going to be about the global market situation but also the rates in the home economies. For many of these investors, the rates will go up. So the surge for high returns, which has flooded many emerging markets, would come down. For Nigeria, ironically, that is the last of a concern because those flows were not coming in. So, the fact of Ukraine, I don’t see it having clear direct impact in that way.
Do you expect the rising oil price to have a positive effect on Nigeria’s revenue?
On the oil price, historically, in the last five decades, you will see that any time crude oil price goes up, it helps economic activities in Nigeria, just because it becomes a source of free cash flow that people spend on a lot of things. The oil sector by itself is part of a relatively small part of the economy, but the spillover is large. What was also the case in the last five decades was that high oil prices were good for the federation budget, finances, but that is no longer true. In 2021, it was not true and in 2022 it is not likely. We could be wrong, and we will be very happy to be wrong. Nigeria is having trouble on crude oil production, it is already below the OPEC quota, unable to produce the extent to which it should.
Then the fact that the price of what you are producing has gone up is not helping you that much. The larger reason is that the cost of the PMS subsidy is going up. So at $85 per barrel, NNPC was projecting that the cost of the PMS subsidy will be around N180bn to N200bn per month. In January, when the crude oil prices had already gone up to $90/barrel, $93/barrel, it has still gone up to N250bn per month. Now, you just mentioned it is about $100 per barrel, our guess right now is that we are looking at N4tn or even more a year in 2022 as the cost of PMS subsidy to the Nigerian government.
The Federal Government has postponed its plan to remove subsidy on PMS. Do you see this as the best decision now?
Two things, first, I want to emphasise that this is Nigeria’s choice. I think there needs to be a consensus among the political elite and that is to be communicated and accepted by the public. So, if there wasn’t a consensus earlier, I hope this could be a time for that, around what should be the choice for Nigeria and it has to be a consensus.
Number two, this is Nigeria’s choice. Our role is certainly not to dictate, we have no ability to dictate. With economies really, you are not meant to make a political decision. What you are meant to do is to lay out what are the cons and consequences of different decisions. So, that is what we are doing. We are just being very clear that this would come with a fiscal cost and the fiscal cost is the number, perhaps N4tn this year, and for the states, our projections suggest that the transfers they will receive from the federation may actually go down by as much as 10 per cent. This is because there won’t be enough coming into the federation account. We hope that there is a solution to this. We are working very closely with the Honourable Minister of Finance on mobilising non-oil revenue. If there isn’t a consensus about safeguarding oil revenue, at least, there are opportunities for mobilising non-oil revenues in terms of the budget support facilities.
Nigeria has continued to borrow despite its revenue challenges. What impact do you envisage from this?
I think the Minister of Finance is in a very difficult position in finance now. When you see some pressing financial needs now, you know that raising revenues will take some time. So, you feel that if you can borrow to meet those pressing needs now, it really helps to strengthen our ability to repay in the future. When we look at it, debt is not necessarily a bad thing. Look at the example I was giving, suppose the main income earner of a household falls sick, such that the income is no longer coming in. Will it make sense for that family to borrow so that they can keep their daughter in college? I will say yes, because they are investing in their daughter and the ability to repay the debt when she gets a job. Of course, it does not make sense to borrow so that the uncle can go out for good time. So it is all about the uses of debt. So, all about debt sustainability is looking at not just the volume of debt but what it is being used for. From that perspective and what we have seen, Nigeria is trying at least at the federal level to really make sure that the debt is used for the right things and a big part of that is being very transparent. So, we work very closely with the government. Not just the government but the public at large can decide whether this is something that works.
PUNCH
A market check on Tuesday showed that NNPCL outlets in Abuja and nearby areas adjusted their petrol price from N1,155 per litre to N1,270 per litre.
The latest adjustment represents an increase of N115 per litre by the state-owned oil company.
The new price change follows recent increases by depot owners and petroleum marketers, who have adjusted their rates twice within a week.
The latest development also comes days after Dangote Refinery resumed the sale of refined petroleum products in dollars, a move that has raised concerns among industry players over the direction of fuel pricing in the country.
The Federal Government has disclosed that 13 of the 50 oil and gas blocks offered in the 2025 Licensing Round will be returned to the licensing basket after failing to attract bids from prospective investors.
The Chief Executive of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Oritsemeyiwa Eyesan, disclosed this on Tuesday at the 2025 Commercial Bid Conference in Abuja.
Eyesan said that although 50 blocks were initially put up for bidding, prospective investors showed interest in only 37.
“At the end of the exercise, we had 50 blocks on offer, but we only had representation for 37 of those 50 blocks. Thirteen of those blocks will be returning back to the basket,” she said.
She further disclosed that 143 companies participated in the commercial bid process, submitting about 200 bids for the available oil and gas assets.
“We have a total of 143 companies showing interest for 200 bids. That, for us, was remarkable, and I must say thank you,” Eyesan stated.
According to her, nearly 300 companies initially expressed interest in the licensing round, which she described as a sign of renewed investor confidence in Nigeria’s upstream petroleum sector.
“When we started the journey, we got interest from almost 300 companies. I repeat, almost 300 companies. That, in my view, was an indication that the tide has turned for Nigeria,” she said.
She explained that the number of interested companies was reduced to 196 following the prequalification stage, before the process moved to the technical and commercial evaluation phases.
“From the almost 300 interests that we got, we moved to the pre-qualification stage, and that number was pruned down to 196,” she added.
The 2025 Licensing Round was launched on November 11, 2025, in accordance with the Petroleum Industry Act 2021, with 50 oil and gas blocks put up for bidding across seven sedimentary basins.
The assets comprise 16 Niger Delta onshore blocks, 18 shallow-water blocks, one deep offshore block, three blocks in the Benin Basin, four in the Anambra Basin, four in the Chad Basin and four in the Benue Trough.
The bid portal opened on December 1, 2025, while a pre-bid conference was held in Lagos on January 14, 2026, to provide prospective investors with guidance on the bidding requirements.
Registration and prequalification submissions closed on February 27, 2026, with the prequalification process completed on March 16.
The NUPRC said winning bids are being determined through a weighted evaluation that considers signature bonus commitments, proposed work programmes and performance security. The process combines technical and commercial scores rather than relying solely on financial offers.
The framework is aimed at ensuring that Nigeria’s petroleum assets are awarded to investors with the financial capacity, technical expertise and operational strength required to accelerate exploration and production in the country’s upstream sector.
The new pricing template, which took effect on July 13, 2026, also pegs Automotive Gas Oil (diesel) at $1.087 per litre and Aviation Turbine Kerosene (ATK) at $0.942 per litre, while coastal deliveries of PMS have been fixed at $1,044.62 per metric tonne.
The development marks the end of naira payments for refined petroleum products, a policy introduced after the commencement of the Federal Government’s naira-for-crude initiative on October 1, 2024.
In a notice issued to petroleum marketers and customers, the refinery announced that all previously issued naira-denominated Proforma Invoices and Deal Recaps for both gantry and coastal transactions had become invalid.
The notice, signed by the refinery’s Group Commercial Operations, directed customers not to make payments against the cancelled invoices, stating that all transactions would now be conducted in United States dollars.
Under the revised pricing schedule, petrol supplied through the gantry will sell for $0.779 per litre, diesel for $1.087 per litre, aviation fuel for $0.942 per litre, while coastal PMS supplies will cost $1,044.62 per metric tonne.
The refinery, however, clarified that the transition does not affect Liquefied Petroleum Gas (LPG), which will continue under its existing payment arrangement.
Industry sources said the decision followed a growing imbalance between the currency used to procure crude oil and that used to sell refined products.
According to the sources, the refinery now receives a larger share of its crude oil from the Nigerian National Petroleum Company Limited (NNPCL) under dollar-denominated supply arrangements, while a significant volume of its refined products had continued to be sold locally in naira.
The resulting mismatch, coupled with exchange-rate volatility and fluctuations in global crude oil prices, reportedly increased the refinery’s foreign exchange exposure and prompted the adoption of a uniform dollar-based pricing framework.
A source familiar with the development explained that the shift became necessary as the volume of naira-denominated crude supplies declined relative to dollar-based crude cargoes.
“The refinery is receiving fewer naira-denominated crude cargoes while a larger proportion of its refined products has continued to be sold in naira. That imbalance, combined with foreign exchange volatility, made the transition to dollar pricing inevitable,” the source said.
The decision is expected to have significant implications for petroleum marketers who source products directly from the refinery for nationwide distribution. It could also influence retail pump prices, depending on movements in the exchange rate, international crude oil prices, logistics costs and marketers’ operating expenses.
The Federal Government had introduced the naira-for-crude policy to encourage domestic refining, reduce pressure on foreign exchange demand and stabilise fuel prices. However, industry stakeholders have recently reported implementation challenges, noting that a growing proportion of crude supplies to local refiners has reverted to dollar-based transactions.
Analysts believe the latest development underscores the continued foreign exchange challenges facing Nigeria’s downstream petroleum sector despite efforts to deepen local refining and reduce dependence on imported fuel.
Independent petroleum marketers on Monday pushed for the restoration of importation rights and projected that the pump price of Premium Motor Spirit, popularly called petrol, could fall below N800 per litre as the Federal Government intensified efforts to force down the cost of petrol.
The development came as the Federal Government met with major operators in the downstream petroleum sector, including representatives of the Dangote Petroleum Refinery, over what it described as the disconnect between falling global crude oil prices and the relatively high pump prices of petrol in the domestic market.
The stakeholders’ meeting on cost-reflective pricing of PMS, held at the headquarters of the Nigerian Midstream and Downstream Petroleum Regulatory Authority in Abuja, brought together the Federal Competition and Consumer Protection Commission, the Independent Petroleum Marketers Association of Nigeria, the Major Energy Marketers Association of Nigeria, the Depot and Petroleum Products Retailers Association of Nigeria, the Depot and Petroleum Products Marketers Association of Nigeria, the Nigerian Association of Road Transport Owners, and other major operators in the sector.
Also in attendance were chief executives and representatives of TotalEnergies, Eterna Plc, Matrix Energy Group, officials of the NMDPRA, and delegates from the Dangote refinery.
Petrol prices have remained a major source of hardship for households and businesses in Nigeria, with pump prices surging following the spike in global crude oil prices triggered by tensions in the Middle East, particularly between Iran and the United States.
Although crude prices have moderated after diplomatic efforts eased the tensions, the reduction has yet to be fully reflected in domestic petrol prices, prompting the Federal Government to convene a stakeholders’ meeting aimed at driving a fair reduction in pump prices.
The National President of the Independent Petroleum Marketers Association of Nigeria, Abubakar Maigandi, urged the government to permit independent marketers to import petroleum products directly, saying greater competition would ultimately reduce prices.
Maigandi also called for support for local refineries, particularly the Dangote Petroleum Refinery, while stressing the need to allow marketers to import products whenever necessary.
“Our major concern is that if products are to be distributed, let IPMAN buy products directly from the Dangote refinery and then, if we request importation, let IPMAN import by themselves. What we are trying to encourage is our local refinery. Let the government allow the local refinery to function properly and assist those who intend to refine products too,” he said.
The IPMAN president assured Nigerians that independent marketers were prepared to slash petrol prices significantly and projected that pump prices could fall below N800 per litre under the right market conditions.
“The price of the product is coming down bit by bit. Even when the price was increased, it was not increased at the same time. Likewise, now, as the price is coming down, we too are bringing the price down. If you check prices all over the country, you will see that independent petroleum marketers are reducing their prices gradually. Presently, we have reduced by N125 per litre nationwide,” he stated.
Miagandi added, “At any time when there is a reduction in price, we are ready to reduce the price to even below N800 per litre, not even N900. It depends on the way we buy the product from the private depot owners and the Dangote refinery.
“I thank God that the Dangote refinery has accepted independent petroleum marketers to start purchasing products directly. It is a plus, and very soon the populace will see the change in terms of price.”
The renewed push for importation comes amid an intense pricing battle in the downstream sector following the commencement of large-scale production at the Dangote refinery and the deregulation of the petrol market.
Speaking to journalists after a closed-door session with the stakeholders, the Minister of State for Petroleum Resources (Oil), Senator Heineken Lokpobiri, said the government remained concerned that current petrol prices were not reflective of prevailing crude oil prices in the international market.
According to him, the government had engaged marketers in frank discussions aimed at ensuring that the reduction in global crude prices translates into lower pump prices for Nigerians.
Lokpobiri said, “The engagements are ongoing. We had very fruitful and frank discussions with the marketers and the leaders of the downstream sector of the petroleum industry with a view to driving down the price of PMS.
“My own opinion is that the petrol prices are not cost-reflective; they are not reflective of the cost of crude oil. But the marketers are also saying that crude oil prices are still high.
“In fact, somebody told us right there that the crude oil price for a month is still over $90 per barrel. But we are saying that when Brent crude was over $118 per barrel, the price was rapidly going up. Now that the price has come down drastically, why has petrol not come down correspondingly? That is a worry.”
The minister said the government had communicated the concerns of consumers to operators and directed them to return with practical measures that would lead to lower petrol prices.
“We have said that these are the issues of concern to the government. They have also said they will go back and think about what they can put together with a view to addressing the issue of the high cost of PMS that is not reflective of the price of crude in the market.
“We told them the concern of the Nigerian consumer, and they have also said they will go back and think of what concrete steps can be taken with a view to ensuring that the price drops,” he stated.
On when Nigerians should expect a reduction in petrol prices, Lokpobiri said discussions were still ongoing and declined to give a deadline. “As we called you today, we will call you as soon as possible. But the important thing is that discussions are ongoing,” he added.
Before the closed-door meeting, Lokpobiri warned petroleum marketers against using profits from previously acquired expensive fuel inventories as justification for maintaining high petrol prices, insisting that the benefits of lower replacement costs must be passed on to consumers.
The government said the continued disconnect between falling international crude oil prices and domestic petrol prices had become a source of concern, warning petroleum marketers against sustaining high pump prices of Premium Motor Spirit despite declining global crude prices and insisting that Nigerians should enjoy the benefits of lower replacement costs in a deregulated market.
The Dangote Petroleum Refinery exported about 466,000 metric tonnes of jet fuel to Europe in June, valued at an estimated ₦757 billion, surpassing shipments from the United States and becoming Europe’s largest supplier during the month.
According to an S&P Global Commodity Insights market report, Nigeria’s jet fuel exports to Europe rose sharply from 232,000 metric tonnes in May to 466,000 metric tonnes in June—the highest monthly volume since the country became a net exporter of aviation fuel in 2024 following the commencement of production at the Dangote refinery.
The June shipment is equivalent to about 582.5 million litres of aviation fuel. At an estimated domestic value of ₦1,300 per litre, the exports are worth approximately ₦757.25 billion.
In contrast, US jet fuel exports to Europe declined significantly, dropping from a record 818,000 metric tonnes in April to 560,000 metric tonnes in May, before falling further to 399,000 metric tonnes in June, leaving Nigeria as the continent’s biggest supplier during the period.
A trader attributed the oversupply in the European market to increased shipments from both Dangote and the US.
“Jet fuel is oversupplied because of high local refinery production. Refineries delayed maintenance to benefit from high prices. The US and Dangote also shipped large volumes. Some flows are also resuming through the Suez Canal from the UAE,” the trader said.
The report noted that the European jet fuel market turned increasingly bearish after prices retreated sharply from the highs recorded during the recent Middle East conflict.
According to Platts, part of S&P Global Commodity Insights, the Northwest Europe jet CIF cargo assessment for July fell to $981.75 per metric tonne on June 30, down from a record $1,694.25 per metric tonne recorded on March 30. The August contract also declined from $1,507.50 to $968.25 per metric tonne over the same period.
Analysts said Europe could receive even more jet fuel supplies in the coming months as the East-West arbitrage remains favourable, encouraging exporters in the Middle East and India to ship cargoes westward.
Although no jet fuel shipments arrived from the United Arab Emirates and Kuwait in June, exports from Saudi Arabia increased to about 106,000 metric tonnes, up from 7,000 metric tonnes in May. Exports from India also rose from 129,000 metric tonnes to 197,000 metric tonnes.
Despite the current oversupply, traders told Platts that market conditions would largely depend on developments in the Strait of Hormuz, the recovery of Middle Eastern refineries affected by recent conflicts, stronger summer travel demand, and refiners’ decisions to prioritise diesel production over jet fuel.
Meanwhile, data from the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) showed that the Dangote refinery exported about 1.66 billion litres of refined petroleum products in April 2026.
The exports included 513 million litres of petrol, 534 million litres of diesel, and 615 million litres of aviation fuel, highlighting the refinery’s growing role in supplying both domestic and international markets.
Dangote Refinery remains Nigeria’s only major refinery currently producing refined petroleum products at volumes sufficient for local consumption and export. Rising output has also made Nigeria a net exporter of petrol for the first time in decades, reinforcing the country’s emergence as a major refining and petroleum export hub in Africa.
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