Petrol marketers may be forced to sell in dollars amidst Naira-for-crude crisis

The National Publicity Secretary of the Independent Petroleum Marketers Association of Nigeria (IPMAN), Chinedu Ukadike, has warned that petrol marketers may be compelled to retail petroleum products in dollars following the decision of the Dangote Petroleum Refinery to halt the sale of products in Naira.

This decision follows the expiration of the first phase of the Naira-for-Crude arrangement between the federal government and local refineries, including Dangote.

Marketers Express Shock and Concern

In an interview, Ukadike expressed shock over the Dangote refinery’s decision and raised concerns about its potential impact on pump prices and the already volatile foreign exchange market.

“I was taken aback (by the announcement by Dangote). I thought that we had forgone that era whereby the issue of the Naira had been settled between the federal government and Dangote. However, it had a specific period for which it would run so that they could test the validity.

“It is quite unfortunate that after the federal government has stabilized the Naira-to-crude issue, we are still talking about it again,”* Ukadike stated.

Potential Shift to Dollar Transactions

Ukadike noted that since many marketers source their products from the Dangote refinery, they might have no choice but to also sell in dollars if the federal government, Dangote refinery, and other local refiners fail to renew the Naira-for-Crude agreement.

“…as marketers, if we are going to be buying petroleum products in dollars, it means that we will also sell in dollars. Because we must pass the bulk to the final consumer. Whatever happens in the distribution chain goes to the pump,” he explained.

Impact on Foreign Exchange and Naira Stability

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Ukadike warned that this development would exert further pressure on Nigeria’s foreign exchange market, particularly as the Naira has been depreciating in recent weeks.

“So, it will really put pressure on the Naira. It’s not good for our economy,” he said.

According to the IPMAN spokesperson, marketers are deeply unsettled by Dangote’s decision.

READ ALSO: PETROAN threatens to abandon Dangote Refinery over dollar-only sales policy

“Are we going to buy in dollars, sell in Naira, and then convert again to dollars to go and buy? We are not conversion centers. So I believe it is very pertinent to address that issue. If not, it will further degrade our Naira and put serious pressure on the foreign exchange.”

Hope for Resolution

While he expressed optimism that the Naira-for-Crude arrangement would be revisited and that Dangote refinery would reconsider its stance, Ukadike emphasized the importance of the Nigeria National Petroleum Company Limited (NNPCL) continuing to sell petroleum products to marketers in Naira.

“If NNPC would sell to us in Naira, we will also buy in Naira. But I am hopeful that it will be resolved soon,” he added.

Dangote Refinery’s Justification

Earlier this week, the Dangote Petroleum Refinery announced a temporary halt in the sale of petroleum products in Naira, citing an imbalance between its sales proceeds and crude oil purchase obligations, which are denominated in U.S. dollars.

The company explained that its Naira-denominated sales have exceeded the value of Naira-priced crude it has received so far. As a result, it decided to temporarily align its sales currency with its crude procurement obligations.

This announcement came just days after the expiration of the Naira-for-Crude arrangement between the federal government and local refineries, under which local refiners were supplied crude oil in the local currency.

With this shift, Nigeria’s downstream petroleum sector now faces a fresh wave of uncertainty, as stakeholders await potential government intervention to stabilize the industry and protect consumers from possible price surges.

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