Marketers, Energy Experts Warn Against Dangote Refinery’s Dollar Pricing, Fear Fresh FX Pressure

Independent petroleum marketers and energy industry experts have strongly opposed the Dangote Petroleum Refinery’s decision to begin pricing petroleum products in United States dollars, warning that the policy could deepen foreign exchange pressures, increase fuel costs, and destabilise Nigeria’s downstream petroleum sector.

The concerns follow the refinery’s introduction of a new pricing template that denominates the ex-depot prices of Premium Motor Spirit (petrol), Automotive Gas Oil (diesel), and aviation fuel in U.S. dollars. Under the revised structure, petrol is priced at $0.779 per litre, diesel at $1.087 per litre, and aviation fuel at $0.942 per litre.

Dangote Refinery explained that the move became necessary because it has been purchasing a significant portion of its crude oil in dollars while previously selling refined products in naira, creating an unsustainable currency mismatch. Company officials also cited inadequate crude supply under the Federal Government’s naira-for-crude arrangement, forcing the refinery to source additional crude at international market prices.

However, stakeholders in the downstream sector argue that the policy could undermine one of the key objectives of establishing a large domestic refinery—reducing Nigeria’s dependence on foreign exchange for petroleum products.

The National Publicity Secretary of the Independent Petroleum Marketers Association of Nigeria (IPMAN), Chinedu Ukadike, reportedly warned that dollar-denominated sales would increase demand for foreign exchange among marketers, exposing fuel prices to exchange-rate volatility and likely translating into higher pump prices for consumers. He maintained that petroleum products refined within Nigeria should ideally be sold in the local currency to reduce pressure on the naira and promote stability in the domestic market.

Energy analysts also expressed concern that the development could create additional liquidity pressures in Nigeria’s foreign exchange market, as marketers would need to source dollars before purchasing products from the refinery. According to them, this could offset some of the gains recorded from local refining and complicate efforts to stabilise fuel pricing.

They further argued that resolving the persistent challenge of crude oil supply to domestic refiners would be a more sustainable solution than shifting transactions to dollar-based pricing. Improved implementation of the naira-for-crude initiative, they said, would enable local refineries to continue transacting in naira while easing pressure on the country’s foreign exchange reserves.

The Dangote Petroleum Refinery, Africa’s largest single-train refinery, has increasingly become a major supplier of petrol in Nigeria since commencing full-scale operations. Nonetheless, it has repeatedly raised concerns over insufficient domestic crude allocations, stating that it requires between 13 and 15 cargoes of crude oil monthly but has been receiving significantly fewer under existing arrangements.

Industry observers say discussions between the refinery, regulators, and relevant government agencies may be necessary to prevent disruptions in the downstream market while ensuring that domestic refining continues to support Nigeria’s broader economic and foreign exchange stability.