Nigerians may face higher prices for diesel and petrol as Dangote Petroleum Refinery temporarily halts the sale of petroleum products in Naira.
In a statement on Wednesday, the refinery explained that the move was necessary to avoid a mismatch between its sales proceeds and crude oil purchase obligations, which are in US dollars.
The $20bn refinery in Lagos noted that its Naira sales have surpassed the value of Naira-denominated crude supplied by the Nigerian National Petroleum Company Limited (NNPCL). Consequently, the refinery will temporarily adjust its sales currency to match its crude procurement currency.
Dangote Refinery affirmed its commitment to the Nigerian market, promising to resume Naira-based sales once it receives Naira-denominated crude from NNPCL.
In July 2024, the Federal Executive Council (FEC) directed NNPCL to sell crude to Dangote Refinery and other local refineries in Naira to reduce pressure on the US dollar and stabilize fuel prices. NNPCL’s Naira-denominated crude sales agreement with the refinery, set to expire in March 2025, is currently under negotiation for renewal.
Since October 2024, over 48 million barrels of crude have been supplied to Dangote Refinery under the Naira-based arrangement, with NNPCL supplying more than 84 million barrels since the refinery began operations in 2023.
Nigeria, facing ongoing energy challenges, had all state-owned refineries non-operational until 2024 and has relied heavily on imported refined products. The removal of the petrol subsidy in May 2023 led to fuel price hikes, exacerbating the daily struggles of citizens dependent on petrol for vehicles and generators amid unreliable electricity supply.
Dangote Refinery began operations in December 2024, with an initial capacity of 350,000 barrels per day, aiming to reach 650,000 barrels per day by year’s end. The refinery has already started supplying diesel, aviation fuel, and now petrol to local marketers.
