ECONOMIC analysts have expressed concern that the suspension of naira-denominated petroleum product sales by Dangote Petroleum Refinery will negatively impact the Nigerian economy and consumers. They cite the potential for renewed fuel queues and a weakened naira as key risks.
Dangote Petroleum Refinery announced the suspension of its naira-based crude sales, citing the non-renewal of its naira-denominated crude allocation by the Nigerian National Petroleum Company Limited (NNPCL). The refinery stated that this exposes it to currency mismatch and hinders cost recovery.
Consequently, Nigerians are expected to face increased prices for premium energy products, including diesel and petrol, as Dangote Petroleum Refinery shifts to dollar-denominated sales. This change will directly influence final pricing at retail fuel stations.
“This decision is necessary to avoid a mismatch between our sales proceeds and our crude oil purchase obligations, which are currently denominated in United States dollars,” the company stated in a press release on Wednesday, March 19.
The $20 billion Lagos-based refinery reported that its naira-denominated product sales have exceeded the value of naira-denominated crude received from NNPCL.
Nigeria’s economy has shown signs of recovery, with headline inflation declining for the second consecutive month to 23.18 percent in February, according to the National Bureau of Statistics (NBS). Analysts attribute this rebound to stable energy costs and reduced foreign exchange demand, partly influenced by the operations of Dangote Petrochemical Refinery.
However, analysts warn that the shift to dollar-based transactions by Dangote and other petroleum marketers could reverse these gains.
“The oil market is not a ‘Jankara’ market. The country runs a risk of fuel scarcity. The Nigerian government shouldn’t wait for the six-month expiration before commencing renegotiation talks with Dangote. The mentality of running a country like we’re running a supermarket is exposing us to further risks,” said Bismarck Rewane, CEO of Financial Derivatives, in response to the development.
Rewane emphasised that the shift to dollar-based transactions will increase demand for dollars, leading to currency volatility. Dangote will price its products in dollars to ensure cost recovery, resulting in higher naira prices for consumers.
He further noted that this situation exposes the Nigerian economy to currency and fuel supply risks, potentially leading to the return of fuel queues.
“It’s going to disrupt the market supply chains, which, over time, have sorted out fuel queues across the country. It’s a lose-lose situation. The Naira will weaken and inflation will rise,” he added.
Economist Kalu Aja, in a social media post, questioned the implications for foreign investment, stating, “If a Nigerian who invested $20 billion in his country can’t get full federation support, why are we going around the world seeking foreign investors?”
As previously reported by The ICIR, the Federal Executive Council (FEC) directed NNPCL in July 2024 to sell crude oil to Dangote Refinery and other local refineries in naira to reduce strain on the US dollar and stabilise petroleum product prices.
NNPCL announced in early March 2025 that the naira-denominated crude sales agreement with Dangote Refinery was structured for six months, expiring in March 2025. The company stated that discussions were underway to renew the contract and that over 48 million barrels of crude oil had been supplied to Dangote Refinery since October 2024 under the existing agreement.
NNPCL also reported supplying over 84 million barrels of crude oil to the private refinery since its commencement of operations in 2023.
Nigeria, Africa’s most populous nation, has faced significant energy challenges, with its state-owned refineries largely non-operational for decades until 2024. The country has relied heavily on imported refined petroleum products, with NNPCL as the primary importer.
Fuel queues have been a recurring issue. Petrol prices have quadrupled since the removal of the subsidy in May 2023, rising from approximately ₦200/litre to around ₦1,000/litre, exacerbating the challenges faced by citizens who rely on petrol for vehicles and generators due to unreliable electricity supply.
Dangote Refinery, owned by Africa’s richest man, Aliko Dangote, commenced operations in Lagos in December 2024 with a capacity of 350,000 barrels per day. The refinery, which faced initial regulatory hurdles, aims to reach its full capacity of 650,000 barrels per day by the end of March 2025.
Harrison Edeh is a journalist with the International Centre for Investigative Reporting, always determined to drive advocacy for good governance through holding public officials and businesses accountable.