Dangote Refinery Shifts to Dollar Pricing Amid Naira-Crude Challenges

Nigeria's Dangote Petroleum Refinery has started pricing fuel in U.S. dollars due to difficulties in securing crude under the naira-for-crude program and rising global oil prices. The decision impacts local currency reliance and could increase dollar demand among fuel marketers, affecting domestic fuel price volatility.

In a significant shift, Nigeria's Dangote Petroleum Refinery has begun pricing its fuel products in U.S. dollars. This change comes as the company faces challenges in securing sufficient crude oil through the government's naira-for-crude program and grapples with rising global oil prices.

The naira-for-crude program, initiated in October 2024, was designed to allow domestic refiners to purchase crude using Nigeria's local currency, aiming to ease pressure on the foreign exchange market. However, Africa's largest refinery is now setting its ex-depot price of petrol at $0.779 per litre, diesel at $1.087 per litre, and aviation fuel at $0.942 per litre. According to Dangote Group Vice President Edwin Devakumar, the refinery has been absorbing a currency mismatch from selling products in naira while procuring crude in dollars.

The decision to switch to dollar pricing could heighten the demand for the U.S. currency among fuel marketers and make domestic fuel prices more susceptible to exchange-rate fluctuations. Although the state-owned NNPC increased Dangote's crude allocation, the refinery still has to import additional cargo at international prices, potentially influencing Nigeria's fuel market dynamics.