S&P Global Energy Warns Against Fuel Subsidy Return in Nigeria

S&P Global Energy has cautioned that a possible return of fuel subsidies in Nigeria could undermine efforts to create a transparent petroleum market and position Nigeria and West Africa as an energy pricing hub. Joel Hanley, Executive Director, Strategy and Benchmarks at S&P Global Energy, stated that the growth of domestic refining capacity, especially with the Dangote Refinery, is pivotal for developing pricing benchmarks that reflect local supply and demand.

Traditionally, West African petroleum cargoes have been priced using European benchmarks, which do not accurately represent the local market. Hanley noted that market participants are opposed to the return of fuel subsidies, as it complicates the establishment of a free and transparent regional petroleum market.

Matthew Cook, S&P Global Senior Reporter for West Africa Refined Products, indicated that Nigeria is transitioning from being a price taker to a price maker in the regional market. Heineken Lokpobiri, Minister of State for Petroleum Resources, emphasized the importance of collaboration between the Federal Government and S&P Global.