Price Hike Fears Grow as Dangote Refinery Reportedly Plans Dollar Sales for Petrol, Diesel

Price Hike Fears Grow as Dangote Refinery Reportedly Plans Dollar Sales for Petrol, Diesel

  • Business
  • July 14, 2026
  • 1 Views
  • 0 Comments
Fresh concerns have emerged over a possible increase in petrol prices and renewed pressure on Nigeria's foreign exchange market following reports that the Dangote Petroleum Refinery may begin selling Premium Motor Spirit (PMS), popularly known as petrol, and diesel in U.S. dollars.

The reported development comes against the backdrop of rising global crude oil prices triggered by renewed geopolitical tensions in the Middle East, raising fears of supply disruptions and increased energy costs worldwide.

Industry analysts warn that if the refinery adopts dollar-denominated sales for domestic transactions, the move could significantly affect fuel prices, increase demand for foreign exchange and place additional pressure on the naira.

The Federal Government has maintained that domestic fuel prices should reflect developments in the international crude oil market. However, the recent surge in global oil prices has reversed earlier declines, increasing the likelihood of higher refining and distribution costs.

According to industry sources familiar with the matter, the refinery's reported plan is linked to uncertainties surrounding the naira-for-crude arrangement between the Nigerian National Petroleum Company Limited (NNPC Ltd.) and the Dangote Refinery.

The policy was introduced to allow the refinery to purchase locally produced crude oil in naira instead of U.S. dollars, reducing pressure on Nigeria's foreign exchange market while helping to stabilise domestic fuel prices.

However, sources said crude supplies under the arrangement have reportedly fallen below the refinery's operational requirements, forcing it to import larger volumes of crude oil from the international market and pay in U.S. dollars.

One industry source, who requested anonymity because he was not authorised to speak publicly, said continuing to sell refined products in naira while purchasing a substantial portion of crude oil in dollars exposes the refinery to significant exchange-rate risks.

"If marketers continue buying in naira while the refinery purchases crude in dollars, exchange-rate losses become inevitable whenever the naira weakens," the source said.
Analysts noted that a switch to dollar-denominated sales would require independent marketers to source foreign exchange before purchasing fuel from the refinery, increasing operating costs and exposing them to fluctuations in the exchange rate.

Those additional costs, they warned, could ultimately be passed on to consumers through higher pump prices, particularly if the naira depreciates further against the U.S. dollar.
Economists have also cautioned that increased demand for dollars by fuel marketers could intensify pressure on Nigeria's foreign exchange market if foreign currency supply does not keep pace with demand.

Commenting on the reports, the Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), Dr. Muda Yusuf, urged caution, noting that the refinery had yet to issue an official statement confirming the policy.

"It is still too early to conclude because we are yet to hear an official position from Dangote Refinery. We need to wait for an official pronouncement before treating it as company policy," Yusuf said.
He explained that the reported move should be viewed primarily as a commercial response to the increasing volatility in the global oil market rather than an arbitrary pricing decision.

According to him, geopolitical tensions, particularly in the Middle East, have made international crude oil prices increasingly unstable, creating significant challenges for refiners.
"What is most disturbing now is the volatility in the global oil market. That, for me, is the bigger issue. With that volatility, you have to adjust your price almost every month," he said.

Yusuf added that if the refinery eventually adopts dollar sales, the decision could simply represent a strategy for managing exchange-rate risks associated with purchasing crude oil in foreign currency.
"If that is the way they want to manage the volatility, then we should see it as part of their strategy for responding to the geopolitical challenges affecting the global oil market," he stated.

However, he warned that such a policy could increase pressure on Nigeria's foreign exchange market.
"If people now have to pay in dollars, that means they have to source the dollars to buy the products. That could create additional pressure on the foreign exchange market and the exchange rate," he added.
Also commenting on the issue, oil and gas analyst Dr. Ayodele Oni said the naira-for-crude arrangement was never intended to provide discounted crude oil to the refinery.

According to him, the arrangement simply ensured that crude oil was purchased in naira while refined products were sold in the same currency, thereby reducing exposure to exchange-rate fluctuations.
"The moment NNPC is unable to deliver sufficient naira-denominated crude, that matching collapses and the refinery is left buying feedstock in dollars while selling in naira. No commercially rational operator can carry that foreign exchange exposure indefinitely," Oni said.

He explained that the refinery has increasingly relied on imported crude purchased in dollars because domestic allocations under the arrangement have reportedly fallen short of expectations.
Oni further noted that while the refinery operates within a free zone that allows foreign currency transactions, unresolved policy issues surrounding the domestic crude supply arrangement continue to create uncertainty.

He warned that widespread dollar-denominated fuel sales could force marketers into the foreign exchange market in large numbers, increasing pressure on the naira, raising fuel prices and contributing to higher inflation through increased transportation and production costs.

Despite the concerns, Oni expressed optimism that government intervention could restore naira-denominated transactions, as had occurred in previous disputes involving the policy.

He suggested that a long-term solution would require guaranteed crude allocations backed by enforceable delivery obligations on NNPC or the establishment of an effective currency-hedging mechanism to bridge the exchange-rate gap between crude purchases and refined product sales.
As of the time of filing this report, Dangote Petroleum Refinery had not issued an official statement confirming reports that it intends to commence domestic sales of petrol and diesel in U.S. dollars.