Dangote Refinery Shifts Sales from Naira to Dollars Amid Currency Concerns

The Dangote Petroleum Refinery in Nigeria is temporarily suspending fuel sales in naira to avoid a currency mismatch with crude purchases in dollars. This decision, aimed at addressing financial discrepancies, may lead to higher petrol prices and a weakened naira, affecting local fuel traders and the economy.

The Dangote Petroleum Refinery in Nigeria has announced a temporary halt in selling fuel in the local currency, the naira, a move intended to avoid a currency mismatch with its crude oil purchases made in dollars. The strategic shift by the 650,000-barrel-per-day refinery could result in increased petrol prices and potentially weaken the naira as local fuel traders vie for dollars.

Situated on the outskirts of Lagos, the refinery is a key player in Nigeria's oil landscape. It has been challenged by securing adequate crude volumes, despite a government agreement allowing it to procure crude in naira. "To date, our sales of petroleum products in naira have surpassed the value of naira-denominated crude received," the refinery stated, citing the need to temporarily align its sales currency with that of its procurement currency.

The Nigerian government had initially allowed state oil firm NNPC Ltd to sell crude to local refineries in naira for six months, starting from October, to mitigate supply constraints. However, the refinery claims it is not receiving the promised volumes. Efforts are ongoing, as NNPC is negotiating a renewal of the crude supply deal, though the outcome remains uncertain. Meanwhile, Dangote has cut petrol prices by over 20% since December and sought legal recourse to stop gasoline imports into Nigeria.

(With inputs from agencies.)