Dangote Refinery Begins Pricing Fuel in US Dollars

Dangote Petroleum Refinery has started pricing fuel products in US dollars, citing inadequate crude oil supplies under the naira-for-crude programme and rising global oil prices. The move could increase demand for foreign currency among fuel marketers and make fuel prices more sensitive to exchange rate fluctuations.

Nigeria's Dangote Petroleum Refinery has begun pricing fuel products for the domestic market in US dollars, marking a major shift in the country's downstream petroleum sector.
The company said the decision was driven by difficulties in obtaining sufficient crude oil under the Federal Government's naira-for-crude programme and the continued rise in global crude oil prices.
The move is expected to have significant implications for fuel marketers, foreign exchange demand and the overall cost of petroleum products in Nigeria.

DANGOTE INTRODUCES NEW DOLLAR PRICING

Africa's largest refinery, with a processing capacity of 700,000 barrels of crude oil per day, has released new ex-depot prices for petroleum products in US dollars.
According to a pricing template circulated to marketers, petrol will now sell at $0.779 per litre, diesel at $1.087 per litre, while aviation fuel has been fixed at $0.942 per litre.
The refinery explained that pricing its products in dollars has become necessary because most of its crude oil purchases are now made in foreign currency.

CHALLENGES WITH THE NAIRA-FOR-CRUDE PROGRAMME

The Federal Government introduced the naira-for-crude initiative in October 2024 to allow domestic refineries to purchase crude oil using the Nigerian currency instead of the US dollar.
The policy was designed to reduce pressure on Nigeria's foreign exchange reserves, strengthen the naira and encourage local refining.
However, Dangote Refinery said the programme has failed to provide enough crude oil to sustain its operations at the required level.

REFINERY SAYS CRUDE SUPPLY REMAINS INADEQUATE

Edwin Devakumar, Vice President of the Dangote Group, said the refinery had for months absorbed the financial burden of buying crude in dollars while selling refined petroleum products in naira.
According to him, that arrangement became increasingly difficult because crude allocations under the government programme were insufficient.
Although the Nigerian National Petroleum Company (NNPC) increased Dangote's monthly allocation from about five cargoes to seven cargoes in May, the refinery says it requires between 13 and 15 cargoes every month to operate efficiently.
To make up the difference, the company has continued importing additional crude oil from the international market at prevailing global prices.

WHAT THE DECISION COULD MEAN

Industry observers believe the decision to price products in US dollars could increase demand for foreign currency among fuel marketers buying directly from the refinery.
The move may also expose domestic fuel prices to exchange rate fluctuations, meaning changes in the value of the naira could have a greater impact on the cost of petrol, diesel and aviation fuel.
With international crude oil prices also rising, marketers fear the development could eventually influence pump prices across the country.

REGULATOR YET TO RESPOND

The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) had not issued an official response to the refinery's new pricing policy at the time of reporting.
Industry stakeholders are expected to monitor the situation closely as discussions continue over the future of the naira-for-crude programme and its impact on Nigeria's energy sector.

INDUSTRY WATCHES NEXT DEVELOPMENTS

The refinery's decision highlights the growing challenges facing Nigeria's domestic refining industry despite recent efforts to increase local fuel production.
Analysts say future government decisions on crude supply, foreign exchange policy and domestic refining will play a key role in determining whether fuel prices remain stable or become more volatile in the months ahead.
The development is also expected to shape broader discussions about Nigeria's energy security, refining capacity and efforts to reduce dependence on imported petroleum products.