Dangote Refinery Halts Naira Sales, Citing Crude Oil Purchase Challenges
Thank you for reading this post, don't forget to subscribe!LAGOS – Nigeria’s largest refinery, the Dangote Petroleum Refinery, has announced a temporary suspension of fuel sales in the local naira currency, citing financial imbalances resulting from purchasing crude oil in U.S. dollars while selling refined products in naira.
The refinery, which processes 650,000 barrels per day, explained that the mismatch between sales proceeds and crude procurement costs necessitated the move. According to a statement released on Wednesday, Dangote Refinery has sold more fuel in naira than the naira-denominated crude it has received, making it unsustainable to continue transactions in local currency.
“Our sales of petroleum products in naira have exceeded the value of naira-denominated crude we have received. As a result, we must temporarily adjust our sales currency to align with our crude procurement currency,” the statement read.
Potential Impact on Nigeria’s Fuel Market
The shift to dollar-based sales is expected to impact fuel prices in Nigeria, as local fuel traders will need to secure foreign currency for purchases. This move could further weaken the naira and increase the cost of petrol for consumers.
Dangote Refinery has faced challenges securing crude oil under a government-backed deal that allowed local refineries, including Dangote, to purchase crude from the Nigerian National Petroleum Corporation (NNPC) in naira. The agreement, which started in October 2024 and was initially set for six months, aimed to ensure a stable supply of crude to domestic refineries.
However, Dangote and other local refiners have complained about inadequate crude supply under the agreement. The refinery has repeatedly stated that it has not received the agreed volumes, leading to disruptions in its operations. Discussions between NNPC and Dangote for a possible extension of the agreement are ongoing, but the state oil company has yet to issue an official response.
Dangote’s Role in Reshaping Nigeria’s Fuel Industry
Despite these challenges, Dangote Refinery has taken bold steps to transform Nigeria’s fuel market. Since December, the company has cut petrol prices by more than 20%, aiming to reduce Nigeria’s dependence on imported fuel. Additionally, it has pursued legal action to restrict gasoline imports, seeking to strengthen local refining capacity and encourage reliance on domestically produced fuel.
As Africa’s richest man, Aliko Dangote has long envisioned his refinery as a game-changer for Nigeria’s energy sector. The country, despite being one of Africa’s top oil producers, has historically relied on imported refined products due to inadequate refining capacity. The Dangote Refinery was expected to reverse this trend, providing locally refined fuel and stabilizing Nigeria’s energy supply.
What’s Next?
The refinery did not specify how long the suspension of naira sales would last, but it assured customers that it remains committed to serving the Nigerian market efficiently. Industry analysts suggest that while this policy shift may cause short-term disruptions, it could also pressure the government to resolve crude supply issues and ensure local refiners receive the necessary crude oil allocations.
For now, fuel traders and consumers face uncertainty, with potential price adjustments on the horizon. The full impact of Dangote’s suspension of naira transactions will unfold in the coming weeks as the market reacts to this major shift in Nigeria’s energy landscape.
