Nigeria’s downstream petroleum sector has been thrown into fresh uncertainty following Dangote Refinery’s decision to begin selling refined petroleum products in United States dollars. The move, which took effect on July 13, was attributed to crude oil supply constraints and a currency mismatch between crude purchases and fuel sales. While the refinery insists the decision is driven by operational realities, marketers and industry stakeholders fear it could trigger another wave of fuel price increases and place additional strain on consumers already grappling with a high cost of living.
The new pricing structure sets petrol at $0.779 per litre, diesel at $1.087 per litre, and aviation fuel at $0.942 per litre. Industry operators warn that marketers who generate revenue in naira will now face the challenge of sourcing foreign exchange to purchase products, exposing them to exchange-rate fluctuations and higher operating costs. The Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN) described the development as evidence of the risks associated with relying heavily on a single dominant refinery for domestic fuel supply.
Analysis of current fuel consumption figures suggests marketers may require as much as $1.29 billion every month to purchase petrol, diesel, and aviation fuel from Dangote Refinery at existing supply volumes. Petrol alone could account for nearly $970 million monthly, highlighting the enormous foreign exchange demand the new arrangement could create. Industry experts argue that such pressure on the forex market may further weaken the naira and contribute to inflationary trends across multiple sectors of the economy.
The development has also reignited debate around the Federal Government’s naira-for-crude initiative, which was introduced to reduce pressure on foreign exchange and strengthen the local currency. Under the arrangement, domestic refineries could purchase crude oil in naira and sell refined products in the same currency. However, reports indicate that Dangote Refinery has struggled to secure sufficient naira-denominated crude supplies, forcing it to source additional cargoes from international markets in dollars. The refinery maintains that the resulting currency imbalance made the switch to dollar pricing unavoidable.
Stakeholders are now urging the Federal Government to accelerate the revival of the Port Harcourt, Warri, and Kaduna refineries while ensuring adequate crude supply for local processors. Many believe that increased competition among multiple operational refineries would help stabilize fuel prices, reduce dependence on a single supplier, and protect consumers from sudden market shocks. As concerns grow over the potential impact on transportation costs, food prices, manufacturing, and household expenses, the controversy surrounding Dangote’s dollar fuel sales is rapidly becoming one of the most significant economic issues facing Nigeria’s energy sector today.
source: newtelegraph
