Dangote Refinery switches fuel sales from naira to U.S. dollars, experts explain why

Dangote Petroleum Refinery has moved fuel transactions from the naira to the U.S. dollar, a shift that is already pushing petrol prices higher across Nigeria. Industry sources say the refinery’s decision was driven by rising exposure to foreign exchange risks and changes in how it buys crude oil.

The new pricing regime takes immediate effect and covers Premium Motor Spirit (PMS), Automotive Gas Oil (AGO), and Aviation Turbine Kerosene (ATK). The policy applies to both gantry sales and coastal deliveries, making it one of the refinery’s most significant commercial moves since it started operations.

Why the refinery moved to dollar sales

According to information obtained from Petroleumprice.ng from a senior industry source familiar with the refinery’s operations, the shift was caused 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 products had continued to be sold in naira.

This mismatch between dollar-based crude purchases and naira-denominated fuel sales increased the refinery’s exposure to exchange rate volatility, making it harder 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 NNPC.

“The decision takes effect immediately. All PMS, AGO and ATK sales, both gantry and coastal, are now dollar-based,” the industry source disclosed.

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. The refinery has been receiving fewer crude cargoes priced in naira from NNPCL, while most of its crude supplies are now dollar-denominated. Maintaining naira sales under such conditions had become unsustainable.

Impact on petrol prices and the downstream market

The policy change has already started affecting the downstream market. Depot operators and fuel marketers are responding by reviewing their prices upward across major distribution hubs. 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.

Legit.ng earlier reported that Nigeria’s downstream petroleum sector recorded fresh reductions in petrol and diesel depot prices on Monday as Dangote Refinery and several major fuel marketers cut prices following a high-level meeting with the Federal Government. The latest adjustments came after the 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 PMS, the Minister of State for Petroleum Resources (Oil), Senator Heineken Lokpobiri, said the current retail price of petrol no longer reflected market realities.

What this means for the naira and consumers: The switch to dollar-denominated fuel sales could put fresh pressure on the naira as more demand for dollars enters the market from fuel buyers. For consumers, the immediate effect is higher petrol prices at the pump, which will likely increase transport costs and the price of goods across the economy.