Dangote Petroleum Refinery has begun pricing refined petroleum products for the domestic market in U.S. dollars, ending naira-denominated ex-depot pricing for petroleum marketers after saying it could no longer sustain the arrangement because of inadequate local crude supplies and rising costs in the international oil market.
The move marks a significant shift in Nigeria’s downstream petroleum sector, tying domestic wholesale fuel prices more closely to global crude oil prices and foreign exchange movements.
Dangote Group Vice President Edwin Devakumar said the refinery had been unable to secure sufficient crude oil under the Federal Government’s crude-for-naira programme, forcing it to import large volumes of crude at international market prices and pay in U.S. dollars.
According to him, the refinery requires between 13 and 15 crude cargoes each month but currently receives only about seven cargoes from the Nigerian National Petroleum Company (NNPC) Limited, despite an increase from about five cargoes previously. The shortfall, he said, created a currency mismatch in which the refinery was purchasing crude in dollars while selling refined products in naira, making the pricing model commercially unsustainable.
The pricing change also comes as Brent crude climbed above $85 per barrel, its highest level in a month, after renewed geopolitical tensions involving the United States and Iran heightened concerns over supplies through the Strait of Hormuz, a strategic shipping route for about one-fifth of global crude oil trade. The rally has increased feedstock costs for refiners worldwide, adding to the commercial pressures facing domestic producers.
Under the new pricing framework, Africa’s largest refinery has fixed the ex-depot price of Premium Motor Spirit (PMS), also known as petrol, at $0.779 per litre, equivalent to about N1,075.61 per litre at the official exchange rate of N1,380.50 to the dollar. The refinery also announced revised dollar prices for diesel and aviation fuel.
Unlike the previous fixed naira pricing system, however, the local currency equivalent of the refinery’s products will now fluctuate in line with movements in the foreign exchange market. The refinery also invalidated all previously issued naira-denominated Proforma Invoices (PFIs) and Deal Recaps for gantry and coastal transactions, completing its transition to dollar-based wholesale sales.
The development represents a departure from the pricing framework introduced under the Federal Government’s crude-for-naira initiative in October 2024. The policy was designed to allow domestic refiners to purchase Nigerian crude in naira, reduce pressure on foreign exchange demand and help stabilise domestic fuel prices.
The transition is expected to increase demand for foreign exchange among petroleum marketers while making ex-depot fuel prices more responsive to exchange-rate movements and changes in international crude oil prices. Although retail pump prices will continue to reflect transportation costs, distribution margins, dealer mark-ups and taxes, marketers’ acquisition costs will now be directly influenced by both currency fluctuations and global oil market trends.
The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) had not commented on the development at the time of reporting.