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The directive effectively ends the acceptance of naira payments for refined products purchased from the facility, marking a sharp departure from the domestic currency framework introduced in late 2024
kaNo —
Nigeria’s downstream petroleum sector entered a new phase on Monday as Dangote Petroleum Refinery commenced the sale of refined petroleum products in United States dollars, ending its previous naira-based pricing regime.
The refinery fixed the ex-depot price of Premium Motor Spirit (petrol) at $0.779 per litre, alongside revised prices for other products, including Automotive Gas Oil (diesel) at $1.087 per litre and Aviation Turbine Kerosene at $0.942 per litre.
The announcement was conveyed in a notice issued to petroleum marketers and customers, in which the refinery declared all previously issued naira-denominated proforma invoices and deal recaps invalid.
The directive effectively ends the acceptance of naira payments for refined products purchased from the facility, marking a sharp departure from the domestic currency framework introduced in late 2024.
“Following our email on the 9th of July, 2026, regarding the transition from Naira to United States Dollars, please note that all issued Naira Coastal and Gantry PFIs/Deal Recaps are now invalid, and no payments should be made against them,” the notice stated.
The shift comes less than two years after the Federal Government introduced the naira-for-crude initiative on October 1, 2024, a policy designed to support local refining, reduce foreign exchange pressure and stabilise domestic fuel prices.
Under that arrangement, refiners were supplied crude oil in naira and, in turn, sold refined products in the local currency.
However, industry findings indicate that the policy has faced mounting challenges in recent months, with a growing share of crude oil supplied to the refinery now denominated in dollars.
Sources familiar with the refinery’s operations said the transition to dollar pricing was driven by the need to align its revenue structure with its cost base, particularly as international crude oil purchases and a significant portion of domestic supply arrangements are now settled in dollars.
According to one official, the refinery has increasingly relied on crude supplies from the Nigerian National Petroleum Company Limited under dollar-based agreements, even as a substantial volume of its refined products continued to be sold locally in naira.
“The imbalance between dollar-denominated crude supply and naira-based product sales created significant exposure to exchange rate volatility,” the source said.
“With fluctuations in the foreign exchange market and global oil prices, it became necessary to adopt a uniform currency framework.”the source added
Another source added that the refinery had received fewer naira-denominated crude cargoes in recent months, further complicating the sustainability of the naira-for-crude model.
“Dangote refinery is receiving fewer naira-denominated crude cargoes compared with dollar-denominated ones, while most of its products were being sold in naira.
That mismatch, combined with exchange-rate uncertainty, made the transition inevitable,” the source explained.
Industry analysts say the decision could have far-reaching implications for fuel pricing in Nigeria, where the downstream sector has been deregulated but remains sensitive to foreign exchange fluctuations and global crude oil prices.
Petroleum marketers, who depend heavily on supplies from the refinery for nationwide distribution, are expected to be directly impacted.
The new dollar benchmark will now serve as the reference price for bulk purchases, meaning marketers must source foreign exchange to pay for products before distribution.
Experts warn that the shift could translate into higher retail fuel prices, depending on the prevailing naira-to-dollar exchange rate.
“This effectively transfers exchange rate risk to marketers and, ultimately, consumers,” an energy analyst noted.
“If the naira weakens further, fuel prices could rise correspondingly, even if the dollar price remains stable.”he added
LPG Transaction Would Continue In Naira
Despite the currency shift, the refinery clarified that Liquefied Petroleum Gas transactions would continue to be conducted in naira, suggesting a partial retention of the local currency framework for selected products.
The development also raises fresh questions about the future of the Federal Government’s domestic crude supply policy.
While the initiative was aimed at strengthening local refining capacity and reducing reliance on imports, its effectiveness now appears to be under strain amid evolving market realities.
The move comes at a time of heightened volatility in the global oil market.
Renewed US/Iran Conflict Triggers Surge In Global Oil Price
On Monday, international crude oil prices surged above $80 per barrel following renewed geopolitical tensions between the United States and Iran, raising concerns about supply disruptions through the Strait of Hormuz.
Benchmark Brent crude rose from about $76 to above $80 per barrel after reports of missile and drone exchanges between the two countries intensified fears over the security of one of the world’s most critical oil transit routes.
Trump Re-Impose Blockade On Iran
The escalation followed remarks by Donald Trump, who announced plans to impose a 20 per cent charge on cargo passing through the Strait of Hormuz, citing the need to recover costs associated with maintaining security in the region.
“The Hormuz Strait is OPEN, and will remain OPEN, with or without Iran. We are reinstating THE IRANIAN BLOCKADE,” he said, adding that the U.S. would be reimbursed through a levy on cargo shipments.
Analysts say the combination of rising global oil prices and Nigeria’s shift to dollar-denominated fuel sales could amplify inflationary pressures in the domestic economy, particularly in transportation and energy-dependent sectors.
For Nigeria, Africa’s largest oil producer, the latest developments highlight the complex interplay between domestic energy policy and global market forces.
While the Dangote refinery’s transition may improve its financial stability and reduce currency risk exposure, it also underscores the persistent challenges facing the country’s efforts to achieve energy security and price stability.
