Dangote Petroleum Refinery is set to suspend the sale of petroleum products in naira within Nigeria, marking a significant shift in the country’s downstream oil market.
The development, first reported by Punch Newspaper, follows challenges surrounding the implementation of the Federal Government’s 2024 crude-for-naira arrangement.
According to the report, the refinery has introduced a new pricing template quoting refined petroleum products in US dollars rather than the local currency.
Punch Newspaper reported that the refinery receives fewer crude oil cargoes priced in naira than those denominated in dollars, leaving the company exposed to foreign exchange risks.
Under the revised pricing structure, the refinery reportedly set the gantry price of petrol at $0.779 per litre, diesel at $1.087 per litre, aviation fuel at $0.942 per litre, while coastal supplies of petrol are priced at $1,044.62 per metric tonne.
A spokesperson for the Dangote Group confirmed the accuracy of Punch Newspaper‘s report. However, a spokesperson for the Federal Government had not responded to requests for comment at the time of publication.
The decision represents a departure from the crude-for-naira agreement reached between Dangote Refinery and the Nigerian National Petroleum Company (NNPC) Limited. Under that arrangement, NNPC agreed to supply crude oil to the refinery in naira, while the refinery would, in turn, sell refined petroleum products to the domestic market in the same currency.
The initiative was introduced to reduce Nigeria’s dependence on US dollars for petroleum transactions and ease pressure on the naira following the country’s foreign exchange reforms.
Industry observers note that returning to dollar-denominated sales could increase demand for foreign currency and potentially place renewed pressure on the naira.
The Dangote Refinery, owned by Africa’s richest man, Aliko Dangote, remains the largest refinery on the continent with a processing capacity of 700,000 barrels per day.
According to Nigeria’s downstream regulator, the facility operated at 101.3% of its installed capacity in May, while local refineries collectively received an average of 578,000 barrels of crude oil per day during the same period, with Dangote accounting for the overwhelming majority of the country’s refining capacity.