4 November
2025 / current concerns
2-023
[This article
may be freely published provided the credit/authorship is retained. We’ll
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NIGERIA’S
PETROLEUM SECTOR: THE CRISES OF FUEL PRICING AND THE PRIZE OF THE FUEL CRISES
by Dr. Uzodinma Adirieje, FAHOA
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CEO/Programmes Director, Afrihealth Optonet Association
(AHOA) – CSOs Network and Think-tank
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INTRODUCTION
Nigeria’s relationship with petroleum is paradoxical: a country of
abundant crude resources that repeatedly stumbles at the downstream finish line
where refined products meet ordinary citizens. The recurrent fuel crises of the
last three years have exposed structural weaknesses—policy inconsistency,
dilapidated infrastructure, governance gaps and perverse market
incentives—while also offering a difficult prize: the opportunity to reform a
sector that, if fixed, could deliver lower long-run costs, energy security and
stronger economic resilience.
The crisis’s proximate trigger was policy: the 2023 removal of the
longstanding petrol subsidy. What governments had maintained for decades as a
political cushion proved fiscally unsustainable. When subsidy support was
withdrawn, retail pump prices immediately re-aligned toward market levels and
inflationary pressure followed through the economy. Households and businesses
confronted sudden, sharp increases in transport and production costs; for many
Nigerians the change translated into an immediate squeeze on livelihoods. The
shock was real and politically consequential.
THE SYSTEMIC FAILURES THAT TURNED AN ADJUSTMENT INTO REPEATED CRISES
First, insufficient refining capacity. For decades Nigeria relied
heavily on imports of refined products despite being an oil producer. The
commissioning of new domestic refining capacity—most notably large private
refineries—promised to change that calculus, but the transition has been uneven
and contentious. Disputes over crude allocation to local refineries,
allegations of “dirty” or substandard imported fuel, and regulatory frictions
have meant that domestic refineries have not yet delivered steady, nationwide
supply relief. The result: periodic scarcity, market confusion, and price
volatility.
Second, distribution fragility and criminality. Pipelines, depots
and the logistics chain are chronically under-protected and poorly maintained.
Vandalism, theft, hoarding and diversion create artificial shortages even when
aggregate imports or refinery output are adequate. Industrial action and
disputes among marketers further interrupt flows. These operational disruptions
translate into long queues, regional price differentials and a flourishing
black market—conditions that punish ordinary consumers while rewarding
arbitrage.
Third, exchange-rate and macroeconomic dynamics. Because a large
share of Nigeria’s refined products are imported or priced in dollars at some
point in the value chain, naira depreciation raises landed cost. Currency
volatility, coupled with global crude and refined product price swings, feeds
through to pump prices. Policymakers have therefore faced the unenviable
choice: continue an expensive subsidy that distorts markets and drains public
resources, or allow market prices that impose sharp short-term pain on
households. Neither option is painless—but both demand a carefully sequenced
policy response.
The human toll of these crises is underappreciated. Tragic
incidents—like tanker explosions when communities gather to siphon spilled
fuel—have been linked to the desperation produced by scarcity and high prices.
These are not merely economic statistics; they are avoidable human losses that
speak to the urgency of durable reform.
So what is the “prize” hidden in this crisis? If the right reforms
are designed and implemented, Nigeria can convert short-term hardship into
long-term gain.
Energy security through domestic refining and logistics investment.
A working network of refineries—public and private—combined with secure, modern
pipelines and storage would reduce import dependence, dampen price volatility
and create jobs. But capacity alone is not enough: transparent crude
allocation, quality oversight, and commercially sensible offtake arrangements
are essential to prevent new bottlenecks and rent-seeking.
Market-based pricing with targeted social protection. Removing
universal subsidies was a necessary fiscal step. However, the transition must
be paired with well-targeted cash transfers, fuel vouchers for vulnerable
households, or temporary compensatory measures that protect the poor while
preserving the price signal necessary for investment and efficient use. This
preserves the fiscal space to invest in infrastructure and safety nets while
avoiding the waste of broad subsidies.
Strengthened regulation and governance. Robust, predictable
regulation reduces investor uncertainty and curbs illicit trade. Independent
quality testing, anti-smuggling enforcement, clear licensing regimes and
accountability for pipeline security reduce opportunities for diversion and
ensure consumers get what they pay for. Parliamentary oversight, civil society
monitoring and data transparency should be routine parts of the governance
architecture.
Regional integration and diversification of fuels. Nigeria can
exploit regional markets by exporting refined products and importing
complementary grades when necessary. At the same time, a strategic shift to
more efficient transport systems, expanded LPG and natural gas use for cooking
and industry, and investments in public transport will lower the economy’s
exposure to petrol price shocks.
Safety, education and rapid response. Immediate interventions to
improve public safety around fuel spills, better emergency response to tanker
accidents, and public education campaigns against hazardous scavenging
practices would reduce avoidable deaths while longer reforms take effect.
Policy design must also reckon with politics. Any reform that raises
prices will face resistance. That is why sequencing, clear communication, and
visible compensatory measures matter. Citizens must be able to see where
savings from subsidy removal go—into roads, health clinics, schools, and better
infrastructure—so the social contract is preserved.
Finally, the private sector and financiers must be partners, not
antagonists. Commercially viable refining and distribution businesses require
predictable regulation and contracts. Where the state intervenes, it should do
so to level the playing field and protect consumers, not to pick winners or
subsidize losses indefinitely.
The fuel crises are thus both warning and opportunity. They expose
governance, infrastructure and policy failures that have been allowed to
accumulate. But they also create political momentum for structural change:
better domestic refining, modernized logistics, market discipline accompanied
by targeted safety nets, and stronger institutions to regulate and enforce.
If Nigeria chooses to treat this not as a cyclical emergency but as
a structural reform moment, the nation can turn the painful immediate costs
into durable gains—lower long-run energy costs, safer communities, and an
economy less vulnerable to imported shocks. That is the prize. The
alternative—reverting to expensive, opaque subsidies and tolerating unsafe,
fragile distribution—would be to accept repeated crises as normal. The choice
is clear; the challenge is to act with courage, competence and compassion.
About this Writer:
Dr. Uzodinma Adirieje is an environmental health researcher with
Afrihealth Optonet Association (AHOA), focused on linking ecosystem health and
human well-being in Nigeria. He is a global health practitioner, development expert,
and civil society leader whose work sits at the critical nexus of biodiversity,
health, and climate change. He serves as the CEO of AHOA, a pan-African and
global South civil society network advancing sustainable development through
advocacy, policy dialogue, and grassroots interventions. With over two decades
of experience, Dr. Adirieje has championed the understanding that biodiversity
is essential for human health - supporting food security, disease regulation,
clean water, and resilient livelihoods. His leadership promotes integrated
approaches that address environmental degradation, climate change, and poverty
simultaneously. Through AHOA, he leads multi-country initiatives on climate
change, ecosystem restoration, renewable energy, universal health coverage, and
climate-smart agriculture, while advocating for stronger governance and
inclusive community participation. At national, regional, and global levels,
Dr. Adirieje engages with governments, international organizations, and civil
society to drive policies linking health and environment. His work underscores
that safeguarding biodiversity is not only an ecological necessity but also a
cornerstone of global health and sustainable development in Africa and the
Global South.
