Fuel Prices in Nigeria: 7 Shocking Reasons They May Never Drop Again

Fuel prices in Nigeria have become a heavy burden on the shoulders of the average citizen.

Since the removal of fuel subsidies in 2023, the price of petrol has skyrocketed, reaching over ₦700 per litre in many parts of the country by 2025.

What was once seen as a temporary adjustment has now become the new normal and for very troubling reasons.

If you’ve been hoping prices will go down soon, here are seven shocking reasons that may never happen.

When President Bola Ahmed Tinubu announced the removal of the long-standing fuel subsidy in his inaugural speech, many believed it was a temporary measure that would eventually be revisited. However, the message was clear: “Subsidy is gone.”

Fuel subsidy had kept petrol prices artificially low for years, costing Nigeria billions in government spending. Its removal was praised by international economists, but for Nigerians, it meant immediate hardship. Without subsidies, fuel prices now fluctuate based on market realities and those realities are grim.

Although Nigeria exports crude oil, it still imports most of its refined petrol, and those imports are paid for in US dollars. With the Naira consistently weakening trading around ₦1,500 to $1 in 2025 the cost of importing fuel has become outrageously expensive.

Importers must source scarce foreign exchange to purchase fuel, and as the naira falls, prices at the pump rise. The more the currency depreciates, the higher the fuel costs will continue to climb. Unless Nigeria achieves forex stability, cheap fuel will remain a dream.

The Dangote Refinery was expected to be the game changer that would end Nigeria’s dependence on imported fuel. It was inaugurated in 2023 with the promise of refining 650,000 barrels per day, but as of mid-2025, it’s still not fully operational at scale.

Although it has begun test runs and limited production, the refinery has yet to flood the local market with affordable refined petrol. This delay has left Nigerians stuck in the same old cycle — importing expensive fuel and paying exorbitant prices.

Despite the claim of deregulation, the Nigerian National Petroleum Company Limited (NNPC) remains the dominant player in the downstream sector. It still controls the majority of fuel imports and pricing structures.

Independent marketers often complain of limited access to forex, inconsistent fuel supply, and high depot prices. With NNPC maintaining a tight grip, there’s little real competition in the market — which means prices are unlikely to drop, even when global crude prices fall.

Crude oil prices around the world are unpredictable. With ongoing conflicts like the Russia-Ukraine war and instability in the Middle East, oil prices often surge without warning.

Even when prices temporarily dip, supply chain disruptions or OPEC production cuts can send them soaring again.

Because Nigeria no longer has price control through subsidy, these global spikes now hit directly at the pumps. When oil prices rise, you pay more and there’s no government safety net to protect you anymore.

One of the biggest dangers of deregulation without proper oversight is that consumers are left at the mercy of market forces and sometimes, exploitation.

The government has not implemented any price monitoring or consumer protection framework since removing subsidies. There are no caps, no limits, no safety nets. Marketers can set prices however they see fit based on market supply, dollar rates, and even speculation.

This environment allows fuel prices to remain high — and even inflate unnecessarily without anyone held accountable.

As Nigeria battles declining oil production and a growing debt crisis, it is increasingly reliant on any and all sources of revenue. One of the easiest ways to generate income is through fuel-related taxes and levies.

The higher the pump price, the more VAT and other revenue the government collects. In this context, there’s no incentive to push prices down, even if it means relief for ordinary Nigerians.

This means that instead of cutting prices, the government may be banking on the revenue generated from high fuel costs to keep the economy afloat.

For the average Nigerian, thes realities translate into higher transport fares, expensive food items, and skyrocketing inflation. As of May 2025, Nigeria’s inflation rate has crossed 33.95% with energy and transportation costs leading the spike.

Many small businesses are struggling to stay afloat, and public transport systems are overwhelmed as more Nigerians abandon personal cars due to fuel costs.

Cooking gas and diesel prices have also surged, making life even harder for those running generators or managing households without stable electricity.

While the situation is difficult, a few potential solutions could bring some relief in the long term:

If the Dangote Refinery and other modular refineries ramp up full-scale operations, local production could drive down prices.
If the federal government tackles the forex crisis, the cost of importing fuel could ease.
A shift to alternative energy sources like solar, electric mobility, and compressed natural gas (CNG) could offer affordable substitutes.
True market competition, driven by regulatory reforms, could lead to lower and fairer pricing.