Dangote Stops Petrol Sale In Naira, Gives Condition For Resumption

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As Dangote Petroleum Refinery temporarily suspends the sale of petroleum products in Naira, Nigerians may experience an increase in the prices of premium energy products like diesel and gasoline.

The company said in a statement on Wednesday that “this decision is necessary to prevent a mismatch between our current US dollar sales proceeds and our crude oil purchase obligations.”

On September 4, 2024, people at a Lagos fuel station wait to refill their jerrycans and tanks. (Photo by FAWAZ OYEDEJI/AFP) &nbsp

The $ 20 billion refinery in Lagos reported that the Nigerian National Petroleum Company Limited (NNPCL) has received more Naira-denominated crude than the company’s Naira-denominated crude.

We must therefore temporarily adjust our sales currency to match our crude procurement currency, the company explained.

If NNPCL and Dangote End the Price War, Petrol Will Rise Above $1, 000.

The refinery said it would resume selling its products to the local Naira market as soon as it received crude cargoes from the NNPCL in Naira and that it would continue to support the Nigerian market.

We will immediately resume selling petroleum products in Naira once we receive an allocation of Naira-denominated crude cargoes from NNPC,” it said.

The refinery’s announcement comes amid its price dispute with the NNPCL.

The Federal Executive Council (FEC) mandated that the NNPCL sell crude oil to Dangote Refinery and other local refineries in naira rather than in the US greenback as part of efforts to lower the strain on the US dollar and ensure price stability of petroleum products in July 2024.

NMDPRA and FCCPC Are In Demand To Stop Sudden Petrol Price Drop

At a gas station, a worker fills a car’s tank. (Photo by SIMON MAINA/AFP)

The NNPCL announced that its six-month, Naira-denominated crude sales agreement with the Dangote Refinery would expire on March 2025.

However, the state-owned company claimed that negotiations were ongoing to replace the contract and that Dangote Refinery has received more than 48 million barrels of crude oil since October 2024 as part of the Naira-denominated deal.

Since the private refinery’s initiation in 2023, the NNPCL has also reported having provided the private refinery with more than 84 million barrels of crude oil.

Nigeria, the most populous country in Africa, is dealing with energy issues because all of its state-owned refineries are shut down until 2024. The state-run NNPCL, the main importer of the necessary commodities, heavily relied on imported refined petroleum products.

In the nation, fuel lines are frequent. Since President Bola Tinubu removed the subsidy in May 2023, driving costs by about 200 litres per gallon to about 1, 000 per gallon, fuel prices have more than quadrupled, adding to the problems of the drivers who use their vehicles and generating sets, no longer as a result of a decades-long epileptic electricity supply.