Beyond the Iran war, which many thought was the cause of the woes of petrol price fluctuation in Nigeria, Dangote is showing how much hold he has on the nation’s petrol supply system, forcing price up again with its latest dollar pricing.
You see, the decision by the Dangote Petroleum Refinery to begin selling refined petroleum products in United States dollars has triggered sharp increases in depot prices.
This is raising fresh concerns over the future cost of fuel in Nigeria and the growing pressure on the country’s foreign exchange market.
Meanwhile industry analysts estimate that petroleum marketers will now require about $1.84 billion every month to purchase Premium Motor Spirit (PMS), diesel and aviation fuel from the refinery, following the new pricing regime.
The policy shift has already coincided with significant increases in depot prices, with the ex-depot price of petrol rising by more than ₦100 per litre at several loading facilities, a development experts say could eventually translate into higher pump prices nationwide.
Marketers Face Massive Dollar Demand
With refined products now priced in dollars, marketers who generate revenue in naira must source foreign exchange before purchasing fuel from the country’s largest refinery.
Industry estimates show that marketers may now require approximately $60.7 million daily to buy petroleum products.
Petrol accounts for the largest share of that demand. At Dangote Refinery’s new gantry price of $0.779 per litre, marketers would need about $36.9 million every day, amounting to roughly $1.1 billion monthly.
For diesel, at $1.087 per litre, there is an estimate of $20.4 million daily demand, translating to about $633.5 million each month.
Meanwhile, aviation fuel, now priced at $0.942 per litre, could now require an additional $3.4 million daily, or approximately $105.1 million monthly.
Altogether, purchases of the three major refined products are expected to generate a monthly foreign exchange requirement of nearly $1.84 billion.
Petrol, Diesel Prices Climb At Depots
The impact of the new pricing policy has already become evident across petroleum depots.
Industry sources revealed that petrol loading prices jumped from around ₦1,137 per litre to as high as ₦1,250, representing an increase of ₦113 per litre at some depots.
Other marketers, including Sahara, AIPEC and African Terminal, also reportedly adjusted their ex-depot prices upward from ₦1,090 to around ₦1,120 per litre.
Diesel prices witnessed similar increases, with some depots raising prices to approximately ₦1,650 per litre, representing hikes of up to ₦150.
The latest adjustments come just days after the Federal Government urged petroleum marketers to lower fuel prices and amid rising international crude oil prices, which recently climbed to about $85 per barrel.
Industry operators warn that the increased acquisition costs may ultimately be transferred to motorists, transporters, manufacturers and consumers.
Dangote Switches Fully To Dollar Transactions
Dangote Petroleum Refinery in an official statement told marketers that, effective July 13, all petroleum products from its gantry will now sell exclusively in US dollars.
The company subsequently cancelled all outstanding naira-denominated invoices and instructed customers to make future payments in foreign currency.
Under the revised pricing structure:
- PMS is priced at $0.779 per litre
- Diesel costs $1.087 per litre
- Aviation fuel sells for $0.942 per litre
- Coastal petrol is priced at $1,044.62 per metric tonne
The refinery, however, clarified that Liquefied Petroleum Gas (LPG) transactions remain unaffected and will continue under existing payment arrangements.
Analysts Warn Of Increased FX Pressure
Energy economists believe the decision effectively transfers exchange-rate risks from the refinery to downstream operators.
Rather than importing fuel directly, marketers will now import dollars to purchase locally refined petroleum products, creating fresh pressure on Nigeria’s foreign exchange market.
Founder of Energy Business Analytics, Dr Kaase Gbako, said the move suggests growing strain on the Federal Government’s naira-for-crude policy or increased reliance on imported crude oil.
According to him, marketers are likely to factor the cost of sourcing foreign exchange into retail fuel prices, increasing the burden on consumers.
Similarly, petroleum economist Prof. Wumi Iledare described the decision as consistent with the realities of a deregulated petroleum market but warned that it would introduce additional operational and financial risks.
He explained that marketers with stronger banking relationships, better liquidity and efficient treasury management systems would enjoy a competitive advantage. meanwhile, smaller operators could struggle with the new financing requirements.
Iledare added that petrol prices would increasingly reflect movements in crude oil prices, refining costs and exchange-rate fluctuations, making more frequent fuel price adjustments inevitable.
Dollar Sales Raise Concerns Over Downstream Dollarisation
Stakeholders in the downstream petroleum sector have also expressed fears that the policy could gradually dollarise Nigeria’s domestic fuel market.
You May Like: Oyo Assembly Backs Makinde’s Call For UN Probe Into Oriire School Abduction
The National President of the Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN), Dr Billy Gillis-Harry, questioned whether marketers would now depend on the Central Bank of Nigeria to access dollars for locally refined products.
Likewise, the National President of the Independent Petroleum Marketers Association of Nigeria (IPMAN), Shettima Maigandi, said independent marketers would face serious challenges converting naira proceeds into dollars before purchasing products.
Both organisations maintain that petroleum products should ideally continue to sell in naira since consumers pay for fuel using the local currency.
Experts Call For Transparency
Experts also urged the Federal Government to clarify the implementation of the naira-for-crude policy.
At the moment, Dangote Refinery imports crude in dollar. this is one of the reasons it is implementing a petrol dollar pricing mechanism.
Meanwhile, the Country Manager at Tradegrid, Jide Pratt, thinks handling it different is necessary.
He argues that products refined from crude purchased under the naira-for-crude arrangement should continue to be sold in naira.
Also, he advocates that only products refined from imported crude should attract dollar pricing.
Similarly, the Managing Director of the Centre for the Promotion of Private Enterprise (CPPE), Dr Muda Yusuf, noted that the impact of the policy on consumers would largely depend on exchange-rate stability.
According to him, while Dangote’s decision is commercially understandable, given its foreign currency obligations, a sustained naira depreciation could rapidly push fuel prices higher.
Industry observers say the latest development reopens debate over the effectiveness of Nigeria’s naira-for-crude policy.
Also, they warn it could significantly reshape the country’s downstream petroleum sector without adequate foreign exchange liquidity and transparent crude supply arrangements.