The $20 billion Dangote Petroleum Refinery in Lagos has announced the suspension of the sales of petroleum products in Naira.
This action follows the Nigerian National Petroleum Company (NNPC) Limited’s decision to halt its Naira-for-crude oil agreement with Dangote and other local refiners.
Last month, NNPC stated that it would cease selling crude oil to Dangote Refinery in Naira by the end of March 2025, citing that the six-month deal, which started in October 2024, had expired.
This development comes after Dangote Refinery initiated a price war, significantly lowering the price of premium motor spirit (PMS) to N825 per litre at its depots, challenging NNPC’s pricing structure.
Market Implications and Strategic Moves
NNPC, a key player in Nigeria’s downstream petroleum sector, continues to distribute fuel nationwide. In contrast, Dangote Refinery relies on partners like MRS Oil, Ardova Plc, and Heyden to supply its products to consumers at retail prices.
In a statement released on Wednesday, Dangote Refinery confirmed the temporary suspension of petroleum product sales in Naira, attributing the move to currency misalignment.
“To avoid a mismatch between our sales proceeds and our crude oil purchase obligations, which are currently denominated in U.S. dollars, we have had to adjust our sales currency,” the statement read.
The company emphasized that its sales of petroleum products in Naira had exceeded the value of Naira-denominated crude it received, making the shift necessary.
“As soon as we receive an allocation of Naira-denominated crude cargoes from NNPC, we will promptly resume petroleum product sales in Naira,” the company assured.
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Addressing Market Rumors
Dangote Refinery also refuted reports claiming it halted operations due to ticketing fraud.
“These reports are malicious falsehoods. Our systems are robust, and we have had no fraud issues,” the company stated.
As the Nigerian oil industry undergoes these significant policy changes, Dangote Refinery’s decision highlights the complexities of balancing market competition, currency risks, and regulatory policies.
