Nigerians could soon face a surge in the prices of premium energy products like diesel and petrol as the Dangote Petroleum Refinery temporarily suspends sales in Naira.
In a statement on Wednesday, the $20 billion refinery—located in Lagos—explained that the move was necessary to avoid financial misalignment. “This decision is necessary to avoid a mismatch between our sales proceeds and our crude oil purchase obligations, which are currently denominated in US dollars,” the company stated.
The refinery pointed out that it has been selling its petroleum products in Naira, but the volume of crude oil it has received from the Nigerian National Petroleum Company Limited (NNPCL) in Naira is insufficient. This imbalance has created financial strain, forcing the refinery to adjust its sales strategy.
“To align with our crude procurement currency, we must temporarily adjust our sales currency,” Dangote Refinery explained.
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The refinery assured Nigerians that this is only a temporary measure. As soon as it receives crude oil allocations from NNPCL that are priced in Naira, it will revert to selling petroleum products in the local currency.
“As soon as we receive an allocation of Naira-denominated crude cargoes from NNPC, we will promptly resume petroleum product sales in Naira,” the company reaffirmed.
With this shift, fuel prices in Nigeria may rise, as the reliance on foreign currency for crude purchases could lead to higher costs. The fluctuating exchange rate of the Naira against the US dollar may further compound the situation, potentially impacting transportation costs and the broader economy.
Dangote Refinery’s decision highlights the broader challenges in Nigeria’s oil sector, particularly the complexities of currency exchange and crude oil procurement. While the refinery remains committed to serving the local market, the temporary shift could have ripple effects on businesses and consumers alike.
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