Dangote Refinery halts product sales in Naira amid FX mismatch concerns

Dangote Petroleum Refinery has announced a temporary suspension of petroleum product sales in Naira, citing an imbalance between its sales proceeds and crude oil purchase obligations, which are denominated in U.S. dollars.

The announcement was made in a statement issued on March 19, 2025, explaining that the company’s Naira-denominated sales have exceeded the value of Naira-priced crude it has received so far.

“This decision is necessary to avoid a mismatch between our sales proceeds and our crude oil purchase obligations, which are currently denominated in U.S. dollars. To date, our sales of petroleum products in Naira have exceeded the value of Naira-denominated crude we have received.

“Our attention has also been drawn to reports on the internet claiming that we have stopped loading due to an incident of ticketing fraud. This is a malicious falsehood. Our systems are robust, and we have had no fraud issues.

“We remain committed to serving the Nigerian market efficiently and sustainably. 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 stated.

The federal government had previously agreed on a Naira-for-crude arrangement. However, the Nigerian National Petroleum Company Limited (NNPCL) recently clarified that this agreement had ended.

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The NNPC disclosed that it had supplied the Dangote Refinery with 84 million barrels of crude oil since the refinery began operations, indicating that any future crude sales would likely be denominated in U.S. dollars.

The Independent Petroleum Marketers Association of Nigeria (IPMAN) has expressed concerns over the ongoing fuel price battle between the NNPC and Dangote Refinery

The fluctuations in fuel prices have significantly affected independent marketers, who struggle to remain competitive amid shifting costs.

Currently, the price of Premium Motor Spirit (PMS) in Awka ranges between N865 and N950 per liter. To counter market pressures, Dangote Petroleum Refinery announced a reduction in the ex-depot price of PMS from N890 to N825 per liter, effective February 27, 2025.

Economic analysts warn that the shift in Dangote Refinery’s sales policy could have far-reaching consequences for the Nigerian downstream sector.

Dr. Tunde Adebayo, an Oil and Gas Analyst at Lagos Business School, stated: “This decision by Dangote Refinery reflects deeper structural issues in Nigeria’s oil sector. If local refineries are unable to secure crude in Naira, it may lead to increased reliance on imported petroleum products, potentially affecting fuel affordability.”

Energy Consultant, Mrs. Olufunke Ojo, added: “The halt in Naira sales could drive up fuel costs for independent marketers, as they may struggle to source products in dollars. This could eventually trickle down to consumers, leading to another round of fuel price hikes.”

On October 1, 2024, the federal government had officially announced the commencement of crude oil sales to Dangote Refinery and other local refineries in the local currency.

However, with the current policy shift, stakeholders are keenly observing how the government and the NNPC will respond to ensure stability in the oil and gas sector.