Fuel marketers reject Dangote Refinery's dollar pricing, warn of naira pressure and price hikes

Independent petroleum marketers and energy experts have strongly criticised Dangote Petroleum Refinery's decision to price petroleum products in United States dollars. They warned that the policy could increase pressure on Nigeria's foreign exchange market and trigger another round of petrol price hikes.

Marketers and experts sound alarm

The stakeholders, who spoke separately on the development, argued that although Dangote Refinery is entitled to make commercial decisions as a private business, introducing dollar-denominated pricing for petroleum products sold within Nigeria could have far-reaching consequences for consumers and the economy. Their concerns come barely a day after the refinery announced that all previously issued naira-based payment invoices for coastal and gantry transactions had been cancelled. It made dollar payments the new standard for Premium Motor Spirit (PMS), diesel and aviation fuel purchases.

The Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN) called the development a dangerous step towards the gradual dollarisation of the Nigerian economy. Its National President, Billy Gillis-Harry, warned that allowing petroleum products consumed locally to be traded in dollars could undermine efforts to stabilise the downstream oil sector while placing marketers under immense financial pressure. He said that marketers would not transfer the burden to Nigerians by selling fuel in dollars but insisted that the Federal Government must ensure that commercial decisions by major industry players align with national economic priorities. He also urged the Nigerian National Petroleum Company Limited (NNPC) to revive state-owned refineries to encourage competition and reduce dependence on a single dominant supplier.

IPMAN calls for presidential intervention

The Independent Petroleum Marketers Association of Nigeria (IPMAN) also appealed to President Bola Tinubu to intervene immediately by sustaining the crude-for-naira arrangement. According to the association, petrol prices are heavily influenced by global crude oil prices and exchange rates. It warned that forcing marketers to source scarce foreign exchange to buy petroleum products would inevitably increase demand for dollars, weaken the naira and push pump prices even higher. IPMAN disclosed that preserving the crude-for-naira policy remains one of the most effective ways to cushion Nigerians from further fuel price volatility, especially amid ongoing global tensions affecting oil markets.

Depot prices already rising

Signs of the policy's impact have already emerged across major petroleum depots. Industry data show that several depots in Lagos, Port Harcourt and Warri have adjusted petrol and diesel loading prices upward as marketers factor in the replacement cost of products purchased under the new dollar pricing framework. Some depots reportedly increased petrol prices by as much as N113 per litre, while diesel prices also recorded sharp increases, raising fresh concerns that retail pump prices could soon follow the same trajectory, according to a report by Punch.

Experts divided on the policy

Energy economists remain split on the implications of the policy. Petroleum economist Prof. Wumi Iledare argued that Dangote Refinery's move is a legitimate commercial strategy aimed at protecting itself from foreign exchange risks, noting that crude oil procurement and several refinery inputs are already dollar-denominated. He maintained that pricing decisions in a deregulated market should ultimately be shaped by competition rather than regulation. However, University of Lagos energy expert Prof. Dayo Ayoade disagreed, insisting that domestic transactions should ordinarily be conducted in naira, Nigeria's legal tender. While acknowledging the refinery's exposure to foreign exchange risks, he questioned the fairness of the policy given the significant support the refinery has previously received from Nigeria's financial system.

Petroleumprice.ng Chief Executive Officer Jeremiah Olatide also called on the Federal Government to revisit the crude-for-naira arrangement, warning that allowing domestic petroleum transactions to become dollar-based could worsen the cost of living for millions of Nigerians.

What this means for the naira and consumers

The refinery's decision has filtered into depots, with importers raising prices nationwide. A prior report disclosed that depot prices rose by over N100 after the Refinery announced its dollar pricing policy. Industry observers say the adjustments are largely precautionary, with marketers seeking to cushion the impact of any sharp rise in international crude prices should the crisis worsen. For Nigerian consumers, the shift risks higher pump prices and a weaker naira as demand for dollars increases across the downstream petroleum sector.