Fuel price hike, the pains, and renewed subsidy debate in Nigeria

Report By Anthony Ebigie, Lagos, Nigeria

Nigerians are bracing for a fresh wave of hardship as petrol prices cross a new threshold this week, pushing the cost of living to breaking point and raising hard questions about the sustainability of President Bola Ahmed Tinubu’s energy policy.

Dangote Petroleum Refinery, the 650,000 bpd refinery and now the price setter for the domestic market in Nigeria raised its Premium Motor Spirit (PMS) gantry price by 6.7% to N1,350 per litre from N1,265, effective September 12, 2026 a development that immediately became the major trigger for latest fuel price surge.

The knock-on effect was immediate across board. Checks by energynewsstream.com, show MRS filling stations have moved to N1,400 per litre from N1,300, NNPC Limited stations to N1,375 from N1,275, and independent marketers to as high as N1,400 per litre in Lagos. Inland markets are set to pay more. Industry estimates indicate Abuja and northern cities could see N1,400-N1,500 per litre due to trucking costs.

The backdrop is a volatile global oil market. Brent has been trading above $100, with Bonny Light averaging $104.65 per barrel, while the naira averaged N1,323.12/$ in the last week. The seven-day average domestic petrol price was already at N1,308.33 and diesel at N1,855.97 per litre before this latest adjustment based on findings by energynewsstream.com

For households, the maths is fatal as transporters say higher PMS costs mean higher fares for buses including other fuel powered mobility tools, a development that has also impacted on food, raw materials and finished goods, hitting workers, students and traders who already spend a disproportionate share of income on transport.

Reacting to the latest fuel price hike across the country, public policy commentator Declan Ihekhaire in an interview with energynewsstream.com described the development as worrisome. Ihekhaire while acknowledging that the shock arising from high energy cost is global, he however noted that the Nigerian case raises much concerns for citizens in the absence of visible steps on the part of government to implement policies that could immediately alleviate the pains of citizens.

“Petroleum products for me is the network that gives life to the average Nigerian and so when such network is disconnected by its hike, it affects every other person except the wealthy, except the cabals” Ihekhaire declared.

Ihekhaire who renewed the renewed the call for subsidy removal as a major step to address the economic hardship which the latest increase in pms has brought on citizens questioned what the current state governors are doing with the increased allocations since the policy on subsidy removal birthed in 2023.

As citizens groan in pains, many are already questioning some of the economic policies of the Tinubu’s administration.

When President Tinubu announced “subsidy is gone” on May 29, 2023, the policy had three pillars: deregulate downstream, save over $10bn annually in subsidy, and redirect savings to refinery revival, forex stability and social cushioning.

Three years on, this latest hike exposes the fault lines:

The government fully ceded price discovery to market forces and a single dominant domestic refiner. With no strategic reserve, price equalization fund, or targeted subsidy mechanism, global crude spikes are transmitted directly to the pump. The promise that local refining would insulate Nigerians from international prices has not materialized because Dangote’s pricing is still benchmarked to international crude.

The administration’s naira-for-crude deal for instance which was meant to lower gantry prices and reduce FX pressure is still faced by implementation challenges that continue to impact on the motive to drive down prices for end-users of petroleum products.

The flagship Presidential CNG Initiative, designed to offer a cheaper alternative to PMS, has seen slow adoption due to infrastructure gaps, conversion costs and safety concerns. For most Nigerians, there is still no viable alternative to petrol as fuel prices continue to surge in the face of the unpredictable global oil market.

Despite increase in government revenue due to the crisis in the middle east, the windfall has not positively impacted much on citizens.As one industry analyst noted, government must “convert this oil-price windfall into an economic cushion… prioritise stable domestic fuel supply, accelerate local refining… and provide targeted support for vulnerable households and MSMEs.”

For the Tinubu administration, the optics are difficult. Fuel price is the most visible barometer of economic policy in Nigeria. Each upward adjustment erodes public trust in the reform narrative that short-term pain would lead to long-term stability.

The administration’s defenders argue the policy is working as intended: Nigeria is no longer paying trillions in opaque subsidies, the Dangote Refinery is operational, and market competition will eventually stabilize prices. They point to the fact that depot prices had been relatively stable at N1,266-N1,300 before the Middle East tensions drove crude above $105.

But for an average citizen, the key takeaway is this: Nigeria has moved from state-subsidized scarcity to market-priced volatility. It solved the fuel queue problem, but not the affordability problem.

Without a transparent pricing formula, a functional crude supply guarantee to local refiners, and accelerated deployment of mass transit and CNG alternatives, every geopolitical shock in the Strait of Hormuz will continue to be felt back home.

The fuel subsidy may be gone, but the politics of fuel price is back with a vengeance.

Fuel price hike, the pains, and renewed subsidy debate in Nigeria