Fuel price hike looms as Dangote stops sale of petroleum products in Naira

Dangote refinery on Wednesday announced the temporary suspension of sales of petroleum products in Naira.

The company, in a statement signed by its management, said the decision is necessary to avoid a mismatch between its sales proceeds and its crude oil purchase obligations, which are currently denominated in dollars.

“Dear valued customers, We wish to inform you that Dangote Petroleum Refinery has temporarily halted the sale of petroleum products in Naira. This decision is necessary to avoid a mismatch between our sales proceeds and our crude oil purchase obligations, which are currently denominated in U.S. dollars,” the statement said.

The decision implies that marketers of petroleum products like petrol and diesel who want to buy the product from the Dangote refinery will pay in dollars. This will lead to an increase in the pump price of the products across Nigeria.

The company said its sales of petroleum products in Naira has exceeded the value of Naira-denominated crude it has received.

“As a result, we must temporarily adjust our sales currency to align with our crude procurement currency. Our attention has also been drawn to reports on the internet claiming that we are stopping loading due to an incident of ticketing fraud.

“This is a malicious falsehood. Our systems are robust and we have had no fraud issues. We remain committed to serving the Nigerian market efficiently and sustainably.

“As soon as we receive an allocation of Naira-denominated crude cargoes from NNPC, we will promptly resume petroleum product sales in Naira. We appreciate your understanding and cooperation during this period,” the company said.

In July last year, the Federal Executive Council (FEC) directed NNPC Ltd to engage Dangote Refinery and other local refineries to resolve the dispute over the sale of crude oil to them.

The FEC, presided over by President Bola Tinubu, also directed that crude oil sales to the refineries be made in naira and that the refineries, located in Nigeria, sell their refined products to the Nigerian market in naira.

Last October, the Nigerian government said it had officially commenced the sale of crude oil and refined petroleum products in Naira.

Last week, the Nigerian government said the policy framework enabling the sale of crude oil in naira for domestic refining remains in force.

The Chairman of the Federal Inland Revenue Service (FIRS), Zacch Adedeji, who also chairs the technical subcommittee on the presidential initiative on naira for crude sales, made this known in reaction to reports alleging unilateral termination of the crude oil sale agreement between NNPC and Dangote Refinery.

At the time, the government said the reports did not reflect the realities of the ongoing work under the Federal Executive Council Initiative on the domestic sale of crude oil and refined products in Naira.