Fresh Petrol Price Hike Begins as Dangote Refinery Dumps Naira for Dollar Sales
- Dangote Refinery has shifted fuel transactions from naira to U.S. dollars, impacting petrol prices across Nigeria
- Increased exposure to foreign exchange risks drives refinery's currency switch amid fluctuating global oil prices
- Fresh price adjustments in the downstream market follow Dangote's new dollar-based fuel sales policy
Pascal Oparada is a journalist with Legit.ng, covering technology, energy, stocks, investment, and the economy for over a decade.
Fresh petrol prices are beginning to emerge across Nigeria's downstream petroleum market after Dangote Petroleum Refinery announced a major change to its fuel sales policy by switching transactions from the naira to the U.S. dollar.
The new pricing regime, which takes immediate effect, covers Premium Motor Spirit (PMS), popularly known as petrol, Automotive Gas Oil (AGO), also known as diesel, and Aviation Turbine Kerosene (ATK).
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The policy applies to both gantry sales and coastal deliveries, marking one of the refinery's most significant commercial decisions since it commenced operations.
Why Dangote switched to dollar sales
According to information obtained from Petroleumprice.ng from a senior industry source familiar with the refinery's operations, the move was driven by increasing exposure to foreign exchange risks and changing crude oil supply arrangements.
The source explained that Dangote Refinery now receives a larger share of its crude oil cargoes from the Nigerian National Petroleum Company Limited (NNPCL) under agreements denominated in U.S. dollars.
However, a substantial portion of its refined petroleum products has continued to be sold in naira.
This mismatch between dollar-based crude purchases and naira-denominated fuel sales has reportedly increased the refinery's exposure to exchange rate volatility, making it more difficult to manage costs.
Experts say the move also signals the collapse of the naira-for-crude deal between the refinery and the Nigerian government via the NNPC.
To reduce this risk, the refinery has decided to align the currency used for fuel sales with the currency used for procuring much of its crude oil.
"The decision takes effect immediately. All PMS, AGO and ATK sales, both gantry and coastal, are now dollar-based," the industry source disclosed.
Exchange rate pressure behind decision
The source also cited persistent fluctuations in global crude oil prices and continued uncertainty in Nigeria's foreign exchange market as additional reasons behind the policy shift.
According to the source, the refinery has been receiving fewer crude cargoes priced in naira from NNPCL, while the majority of its crude supplies are now dollar-denominated. Maintaining naira sales under such conditions, the source noted, had become increasingly unsustainable.
Fresh petrol price adjustments begin
The policy change has already started affecting the downstream market, with depot operators and fuel marketers responding by reviewing their prices upward across major distribution hubs.
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Industry observers say the increase represents the first immediate market reaction to Dangote Refinery's transition to dollar-denominated fuel sales. More price adjustments are expected in the coming days as marketers factor the new cost structure into their operations.
The development is likely to have significant implications for petrol prices nationwide, with transport operators, businesses and consumers closely monitoring how the shift could influence pump prices and overall fuel supply in the weeks ahead.
Dangote Refinery, marketers release new petrol prices
Legit.ng earlier reported that Nigeria's downstream petroleum sector recorded fresh reductions in petrol and diesel depot prices on Monday as the Dangote Petroleum Refinery and several major fuel marketers cut prices following a high-level meeting with the Federal Government.
The latest adjustments came after the Federal Government urged operators to align fuel prices with the recent decline in global crude oil prices, amid increasing competition and improved domestic product supply.
Speaking at a stakeholders' meeting on cost-reflective pricing of Premium Motor Spirit (PMS), the Minister of State for Petroleum Resources (Oil), Senator Heineken Lokpobiri, said the current retail price of petrol no longer reflected market realities.
Source: Legit.ng
