Nigeria is bracing for a significant surge in petrol prices, with projections indicating that the cost per litre could reach nearly ₦900. This follows Dangote Refinery’s decision to suspend naira-based petroleum product sales, a move that has raised concerns about pricing stability in the domestic fuel market.
Dangote Refinery’s Naira Suspension and Market Implications
On Wednesday, Dangote Group announced a temporary suspension of naira-based petroleum product sales, citing a misalignment between its sales proceeds and crude oil purchase obligations, which are priced in U.S. dollars.
In an official statement, the company clarified:
“To date, 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 Independent Petroleum Marketers Association of Nigeria (IPMAN) has expressed concerns that this decision could disrupt pricing dynamics and fuel supply, potentially leading to a return to rising fuel prices after recent declines.
IPMAN’s National President, Abubakar Maigandi, warned that depot owners had already started increasing ex-depot prices, with petrol now selling for ₦835 per litre in Lagos, up from ₦815 per litre prior to the suspension.
Impact on Petrol Prices and Market Stability
As of Thursday noon, petrol prices at loading depots surged from ₦852 to ₦875 per litre. Several major depots, including Matrix Warri, Zamson, Rainoil, Pinnacle Warri, and Sobaz, all raised their prices to ₦875 per litre, reflecting the market’s reaction to Dangote’s suspension of naira sales, according to industry sources.
Industry experts have warned that the refinery’s decision may create pressure on the foreign exchange market, potentially increasing demand for dollars and exacerbating inflationary trends.
Government Assurances and Policy Response
Zacch Adedeji, Chairman of the Technical Sub-Committee on Domestic Sales of Crude Oil and Refined Products in Naira, assured that the naira-for-crude policy remains in place, despite Dangote’s temporary suspension.
“There has been no decision at the policy level to discontinue this approach. The framework for domestic crude transactions remains in place, and local refineries are not excluded from access to domestic crude.”
However, stakeholders argue that unless the government ensures consistent crude supply to local refiners at naira rates, the pricing of petroleum products in Nigeria could become increasingly volatile.
Outlook: Rising Prices and Economic Uncertainty
Despite a recent 40% increase in crude output, Nigeria’s dependence on imported refined fuel leaves it vulnerable to price shocks. The suspension of naira-based fuel sales by Dangote Refinery, which had been driving recent price reductions, threatens to reverse these gains.
With geopolitical uncertainties and supply chain constraints, the Nigerian government faces a tough challenge in stabilizing fuel prices and ensuring affordability for consumers.
