By Otunba (Dr) Abdulfalil Abayomi Odunowo
If Nigerian crude is refined at home and yields petrol, diesel, aviation fuel, LPG and petrochemicals from the same barrel, the debate over PMS pricing must examine the economics of the whole barrel not petrol in isolation.
For decades, Nigerians were told that petrol was expensive and the country chronically vulnerable to fuel crises for a simple reason: Nigeria exported crude oil and imported finished products. We paid for foreign refining. We paid freight, insurance, port charges and demurrage. We drained scarce dollars to finance imports and imported inflation along with our fuel.
The arrival of the Dangote Petroleum Refinery was therefore rightly celebrated as potentially transformational. Nigeria finally had a world-scale refinery on its own soil.
Today, however, Nigerians are entitled to ask a legitimate question: if we produce the crude in Nigeria, refine a substantial volume of it in Nigeria, and pay for part of that domestic crude in naira, why does the Nigerian consumer remain so tightly tethered to international fuel prices?
The answer requires us to look beyond petrol.
One Barrel of Crude Does Not Produce Only Petrol
This is the most important point missing from much of the public discussion.
A barrel of crude oil is approximately 159 litres. A modern complex refinery does not simply convert those 159 litres into petrol. Dangote itself lists gasoline, diesel, aviation fuel and polypropylene among its major products. Independent analysis by Kpler previously estimated that at 650,000 barrels per day of crude throughput, Dangote could produce roughly 294,000 barrels per day of gasoline about 45 per cent of expected output, not 100 per cent.
The remainder becomes other valuable products: diesel, aviation fuel, LPG, petrochemical feedstocks and additional refinery streams. That distinction matters enormously.
We make a serious economic error when we take the international price of one barrel of crude, divide it by litres, and treat petrol as though it alone must recover the entire cost of that barrel. It does not. The barrel produces a basket of valuable products, and virtually every component of that basket generates revenue.
Follow the Whole Barrel
From one barrel of crude, the refinery produces substantial quantities of petrol, diesel, Jet A1 aviation fuel, LPG, petrochemical feedstocks and other valuable streams. The refinery earns money from more than petrol.
In September, Dangote’s diesel ex-gantry price rose to about ₦1,850 per litre while its petrol gantry price stood around ₦1,265 per litre. Diesel represents another large share of the refined barrel. Petrol cannot reasonably be discussed as though it is carrying an otherwise worthless barrel on its shoulders.
Diesel earns revenue. Jet fuel earns revenue. LPG earns revenue. Petrochemicals earn revenue. And petrol earns revenue.
The proper question is therefore: what is the total value generated from the entire barrel compared with the total cost of acquiring and processing that barrel? That is a far more meaningful measure of refinery economics.
Dangote Is Already Demonstrating the Value of the Whole Barrel
This is not merely theoretical. The refinery’s latest financial performance shows how valuable sophisticated refining can be. Its first-half 2026 results reportedly showed revenue of approximately $13.9 billion, EBITDA of about $2.6 billion and profit after tax of roughly $1.82 billion. The reported gross refining margin reached approximately $24.50 per barrel.
That is something Nigerians should welcome. A profitable Dangote Refinery is infinitely preferable to the decades in which Nigeria spent billions of dollars importing products while government-owned refineries consumed enormous resources without reliably supplying the country.
Dangote should make a reasonable profit. Its investors should receive fair returns. Its lenders must be repaid. Its enormous investment must be recovered. Nigeria should encourage not punish private capital willing to invest tens of billions of dollars in productive infrastructure.
But profitability and transparency are not enemies. The refinery’s success actually strengthens the case for asking how Nigeria’s domestic-energy advantage should be transmitted to Nigerians.
Naira-for-Crude Must Mean Something
The Nigerian Government introduced Naira-for-Crude partly to ease pressure on foreign exchange and strengthen domestic energy security. Yet merely changing the currency in which crude is paid for does not automatically make the crude cheaper.
If a Nigerian barrel is valued at the full international dollar benchmark and that dollar value is simply converted into naira, we have changed the settlement currency, not necessarily the economic price. That distinction is critical.
If Nigerian crude is internationally priced, domestically refined products are internationally priced, and every valuable refinery product captures international opportunity value, Nigerians are entitled to ask: where exactly is the domestic-resource advantage? What measurable benefit reaches the Nigerian motorist, transporter, farmer, manufacturer and household?
This Is Not an Argument for ₦300 Petrol
We must equally avoid simplistic conclusions on the other side. The fact that diesel, aviation fuel, LPG and petrochemicals generate substantial revenues does not mean petrol should be virtually free.
A refinery has enormous additional costs: energy consumption, catalysts and chemicals, maintenance, salaries, financing, depreciation on a multi-billion-dollar facility, storage, logistics and taxes. There must also be a commercially reasonable return on investment.
Furthermore, in a deregulated market every refinery product has an opportunity value. If diesel can be exported at a particular international price, a private refinery cannot ordinarily be expected to pretend that value does not exist simply because the crude was processed in Nigeria.
Acknowledging these realities does not invalidate the central question. It simply means Nigeria needs a sophisticated whole-barrel pricing conversation rather than slogans.
The ₦1,266 Question
Recent Lagos depot reports put PMS at around ₦1,266 per litre at Dangote and some other depots, with retail pump prices still above ₦1,300 in many locations.
Rather than merely asking whether ₦1,266 is higher or lower than imported petrol, government and regulators should ask something deeper: what reasonable return does the refinery earn across the entire barrel at that PMS price?
That analysis should account for the acquisition cost of crude; the refinery’s actual product yields; revenue from petrol, diesel, aviation fuel, LPG, petrochemicals and other products; operating expenditure; financing costs; depreciation; taxation; logistics; and a reasonable return on capital. Only then can Nigerians intelligently determine whether domestic PMS is fairly priced.
The Government Has a Responsibility Too
It would be unfair to place the entire responsibility on Dangote. The refinery is a private commercial enterprise. It did not write Nigeria’s petroleum laws. It does not determine national energy policy. The Federal Government does.
If government wants Nigerian crude to produce a measurable advantage for Nigerian consumers, government must design the mechanism. Nigeria could consider a transparent Domestic Energy Pricing Framework covering crude supplied under domestic obligations. Such a framework could preserve deregulation and reasonable refinery profitability while ensuring that domestic crude supplied under special arrangements produces an identifiable Nigerian benefit.
The principle should be straightforward: Nigerian crude supplied under a domestic-energy programme should create a measurable domestic-energy advantage. Otherwise, Naira-for-Crude risks becoming principally a settlement mechanism rather than a consumer-energy policy.
Local Refining Must Deliver More Than Local Location
Nigeria should celebrate the Dangote Refinery. It is an extraordinary industrial achievement. It has substantially changed Nigeria’s petroleum trade, created enormous refining capacity and demonstrated that world-scale industrial infrastructure can be built in Nigeria. The refinery is now sufficiently competitive that it exports petroleum products internationally. Its chief executive has spoken publicly about its ability to supply aviation fuel globally, and the refinery has benefited from exceptionally strong international refining margins during recent global disruptions.
That is success. But industrial success and national interest must complement each other.
The Nigerian people did not merely desire a refinery physically located within Nigeria. They desired energy security. They desired reduced dependence on foreign exchange. They desired freedom from imported fuel. And ultimately, they expected some economic benefit from producing and refining their own natural resource. That expectation is reasonable.
One Barrel. Many Products. One Question.
The debate must therefore change.
Stop asking only:
“How much did the crude barrel cost?”
Start asking: “How much value did the entire refined barrel generate?”
Because petrol is not the only child of crude oil. Diesel comes from that barrel. Aviation fuel comes from that barrel. LPG comes from that barrel. Petrochemical products come from that barrel. And every one of them has commercial value.
The Nigerian consumer should not be presented with an economic argument that implicitly makes PMS responsible for recovering virtually the entire international value of the crude while every other product from the same barrel is simultaneously generating substantial revenue.
Let Dangote make money. Let investors receive fair returns. Let Nigeria become Africa’s refining powerhouse. Let us export surplus products to the world.
But let government also answer the question millions of Nigerians are entitled to ask: if the crude is ours, much of it is supplied locally, the refinery is here, the products are refined here and multiple valuable products are sold from every barrel what precisely is the Nigerian consumer’s share of the advantage?
That is not an attack on Dangote. It is a demand for intelligent energy policy.
Until Nigeria develops a transparent whole-barrel domestic pricing framework, the promise of local refining will remain incomplete. Local refining should not merely change where petroleum products are produced. It should change what being an oil-producing country means to the Nigerian people.
— Otunba (Dr.) Abdulfalil Abayomi Odunowo
