The Dangote Petroleum Refinery has announced a temporary suspension of fuel sales in Nigeria’s local currency, the naira, citing persistent foreign exchange (forex) discrepancies between its crude oil purchases and domestic sales. This decision could lead to a significant increase in fuel prices, raising concerns over inflation and affordability for consumers.
The refinery, Africa’s largest, has been sourcing crude oil primarily in U.S. dollars but selling refined petroleum products in naira within Nigeria. However, recent fluctuations in the forex market have made it increasingly difficult for the refinery to maintain stable pricing. In a statement issued by the company’s management, Dangote Refinery cited the widening gap between the official exchange rate and parallel market rates as a major challenge affecting operations.
“We remain committed to ensuring the availability of petroleum products in Nigeria, but the current forex instability has made it impractical to continue fuel sales in naira. We are engaging with the relevant authorities to explore viable solutions,” the statement read.
Industry analysts predict that this move could push local fuel prices upward, as marketers and distributors adjust to new pricing models based on foreign exchange rates. Currently, Nigeria relies heavily on imports for refined petroleum products despite the operational commencement of the 650,000-barrel-per-day Dangote Refinery, which was expected to ease the country’s fuel dependency.
In response to the development, the Nigerian National Petroleum Company (NNPC) Limited has reassured Nigerians of continued fuel supply stability, emphasizing that ongoing discussions are being held with the refinery to address the issue.
The suspension comes at a time when Nigeria is grappling with broader economic challenges, including high inflation, a weakening naira, and subsidy removal policies that have already led to increased transportation and commodity costs. Experts warn that unless a resolution is reached soon, the ripple effect of Dangote Refinery’s decision could further strain household budgets and business operations nationwide.
As stakeholders push for government intervention, the refinery is expected to hold further negotiations with the Central Bank of Nigeria (CBN) and the federal government to explore possible mechanisms that would allow continued naira transactions without exposing the company to excessive forex risks.
