Nigeria’s midstream and downstream petroleum regulator has said the Dangote Petroleum Refinery is acting within the provisions of the Petroleum Industry Act (PIA) by pricing some petroleum products in United States dollars.
Officials of the regulatory agency, who spoke anonymously, explained that the law allows operators to recover their investment and operational costs in the currency in which those costs were incurred. According to them, since the refinery has been sourcing a significant portion of its crude oil in dollars, it is permitted to recover those expenses through dollar-denominated sales.
The officials noted that the refinery’s increasing reliance on imported crude and purchases from suppliers outside the naira-for-crude arrangement has raised its foreign currency obligations. They added that higher global crude prices, driven by geopolitical tensions, have also increased operating costs.
The regulator stressed that the issue is linked to crude supply rather than any breach of the law, urging crude suppliers, particularly the Nigerian National Petroleum Company Limited (NNPCL), to address challenges affecting the implementation of the naira-for-crude policy.
Earlier this week, Dangote Refinery informed marketers that petrol, diesel and aviation fuel supplied through gantry and coastal transactions would now be priced in dollars. The company also cancelled previously issued payment invoices denominated in naira, while clarifying that liquefied petroleum gas (LPG) sales would remain unaffected.
The announcement triggered price adjustments at several fuel depots as marketers reviewed replacement costs. Industry data indicated that petrol and diesel prices increased at some depots following the policy change.
Sources within the Dangote Group said the refinery had accumulated significant demand for dollars from crude suppliers after receiving insufficient crude under the naira-for-crude arrangement. They argued that continuing to sell refined products in naira while purchasing crude in dollars had become financially unsustainable.
The company also maintained that, as an operator in a free trade zone, it is permitted to conduct transactions in foreign currency and could no longer absorb losses arising from delays in accessing dollars.
However, the move has drawn criticism from petroleum marketers and industry stakeholders. They warned that pricing locally consumed fuel in dollars could increase pressure on Nigeria’s foreign exchange market and create additional uncertainty in the downstream sector.
The Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN) also expressed concern, warning that widespread dollar-denominated fuel transactions could encourage the gradual dollarisation of the economy and complicate efforts to stabilise the petroleum market.
