Dangote Refinery's Dollar-Driven Strategy Amid Naira Instability

Dangote Oil Refinery has temporarily ceased fuel sales in local currency, opting for dollars to avoid currency mismatch with crude purchases. This decision may escalate gasoline prices and weaken the naira, as local traders seek USD. The switch aligns sales and procurement currencies.

In a strategic shift, the Dangote Oil Refinery has announced a temporary suspension of fuel sales denominated in the local naira currency. This decision comes as a measure to circumvent potential financial discrepancies between local sales conducted in naira and the procurement of crude oil paid for in dollars.

The Lagos-based refinery, capable of processing 650,000 barrels per day, anticipates this move might lead to increased gasoline prices and contribute to a further depreciation of the naira. Local fuel traders are expected to rush for U.S. dollars in response to this currency adjustment.

A statement from the company highlighted that their naira-based sales of petroleum products have thus far surpassed the naira value of the crude received from the government. To address this imbalance, the refinery has decided to align its sales denomination with its crude sourcing currency, opting for the dollar.

(With inputs from agencies.)