By Amb. Anderson Osiebe.
In a country paradoxically rich in crude oil yet burdened by some of the highest fuel costs in its history, a troubling question continues to echo across homes, markets, and boardrooms: Are Nigerians paying an artificial price for fuel, and how sincere is the government’s much-publicised naira-for-crude policy?
At the heart of the debate lies a complex web of policy contradictions, global market realities, and domestic structural inefficiencies that have rendered fuel pricing in Nigeria both opaque and, to many citizens, deeply suspicious.
The Promise of Naira-for-Crude.
The naira-for-crude initiative was introduced as a strategic intervention. A bold attempt to reduce dependence on foreign exchange by allowing local refineries, particularly the Dangote Refinery, to purchase crude oil in naira rather than dollars.
The logic was simple: refine locally, cut import costs, stabilize pump prices, and ultimately ease the burden on Nigerians.
However, months into implementation, the expected relief remains largely elusive.
Recent developments show that despite this policy, petrol prices continue to surge, in some cases approaching ₦1,500 per litre amid global oil shocks.
This raises a fundamental concern: if crude is being supplied in naira, why are Nigerians still paying prices tied to dollar-denominated global benchmarks? Shuooooooooo – na wa o.
Energy experts argue that the answer lies in the structural design of the oil market itself. According to analysts, crude oil regardless of where it is refined, is still priced using international benchmarks and denominated in U.S. dollars.
In essence, the naira-for-crude policy may exist more on paper than in real economic impact.
Even local refineries are not insulated. Nigeria has struggled to meet the crude demands of its own refining capacity, forcing operators to source crude externally, often at higher costs. This defeats the very purpose of the policy and reintroduces the same foreign exchange pressures it was meant to eliminate.
More striking is the revelation that some locally refined fuel still reflects international price fluctuations, meaning Nigerians are effectively “importing pricing” even when refining domestically.
Artificial Pricing or Market Reality?.
The term “artificial fuel price” is increasingly gaining traction in public discourse. But what exactly makes the price “artificial”?
Critics argue that several hidden layers contribute to inflated pump prices: Dollar-indexed crude pricing, even under a naira-based transaction framework, Logistics and middleman costs, including scenarios where Nigeria’s crude is sold abroad and re-imported at a premium, Inadequate crude allocation to local refineries, forcing reliance on imports, Market deregulation, which transfers pricing power fully to market forces.
Taken together, these factors create a situation where the price Nigerians pay does not reflect the country’s status as a major oil producer, but rather mirrors the volatility of global oil markets.
To assess the government’s sincerity, one must distinguish between policy intent and policy execution.
On paper, the reforms, including subsidy removal and the introduction of the naira-for-crude framework are aimed at long-term economic stability.
Government officials maintain that these measures are necessary to correct decades of fiscal distortion and attract investment into the sector.
However, implementation gaps continue to undermine credibility.
For instance, stakeholders have noted that the naira-for-crude arrangement has not been sufficiently scaled or optimized to influence domestic pricing meaningfully. Meanwhile, the absence of strategic petroleum reserves and weak safety nets has left citizens fully exposed to price shocks.
Even more concerning is the perception that the benefits of reforms are not trickling down to ordinary Nigerians, a sentiment that fuels distrust and accusations of policy insincerity.
Who Is Fooling Who?
This is where the narrative becomes uncomfortable.
Is the government overstating the impact of its policies? Are oil sector players leveraging deregulation to maximize profit? Or are Nigerians expecting immediate relief from a system still deeply tied to global economics?
The reality may be a combination of all three.
There is evidence to suggest that while the government’s policy direction may be economically rational, its communication and execution have fallen short. At the same time, market players operate within a deregulated environment that allows pricing to reflect profit motives as much as cost realities.
Ultimately, Nigerians find themselves caught in the middle, paying prices shaped by global forces, local inefficiencies, and policy inconsistencies.
The Way Forward.
If the naira-for-crude policy is to move beyond symbolism, several urgent steps are required: Transparent crude allocation to local refineries, Clear pricing framework that reflects domestic advantages, Strengthened regulatory oversight to prevent price distortions, and Targeted social interventions to cushion economic hardship.
Without these, the policy risks becoming yet another well-intentioned reform that fails to deliver tangible relief.
Nigeria’s fuel pricing dilemma is not just an economic issue, it is a test of governance, transparency, and public trust.
And until the gap between policy promises and real-world outcomes is closed, the question will persist, louder than ever.
So, in Nigeria’s oil sector, who is really fooling who?
A question only the drivers of the policy can answer.
Amb. Anderson Osiebe, Executive Director, HallowMace Foundation Africa, Public Policy Expert and an Administrator writes from Abuja – Nigeria.
God, Abeg Still Bless Nigeria, Anyhow Wen E Be!