Dollar Pricing at Dangote Refinery Triggers ₦100 Fuel Hike, Puts $1.84bn Monthly FX Demand on Marketers

• Petrol loading prices climb by over ₦100 per litre as marketers adjust to dollar-denominated purchases.
• Industry experts warn new pricing regime could pile pressure on the naira, foreign exchange market and inflation.
• Operators fear higher financing costs, while consumers brace for fresh pump price increases nationwide.

Nigeria’s downstream petroleum sector is facing renewed uncertainty after Dangote Petroleum Refinery began selling refined petroleum products in United States dollars, a move that has already pushed depot prices of petrol above ₦1,200 per litre and is expected to generate an estimated $1.84 billion monthly foreign exchange demand from marketers.

The new pricing policy, which took effect on July 13, requires marketers purchasing Premium Motor Spirit (PMS), Automotive Gas Oil (diesel) and Aviation Turbine Kerosene (ATK) from the refinery to make payments in dollars instead of naira.

ATTENTION: Click “HERE” to join our WhatsApp group and receive News updates directly on your WhatsApp!

The immediate impact has been reflected in higher ex-depot prices, with petrol rising by more than ₦100 per litre in several depots. Industry sources said some loading points now sell PMS between ₦1,120 and ₦1,250 per litre, while diesel prices have climbed to about ₦1,650 per litre in parts of the country.

READ ALSO: Diesel Prices Surge As Regional Fuel Costs Diverge Despite Stable Petrol Market

Market estimates indicate that marketers will now require approximately $60.7 million daily to procure petroleum products from the refinery. Of that figure, petrol alone accounts for roughly $36.9 million each day—equivalent to over $1.1 billion monthly—based on the refinery’s new gantry price of $0.779 per litre.

Diesel purchases are projected to consume another $633.5 million monthly, while aviation fuel could require an additional $105.1 million, bringing the combined monthly foreign exchange requirement to about $1.84 billion.

The latest development comes despite recent calls by the Federal Government for lower fuel prices and coincides with a sharp rise in global crude oil prices, which recently climbed to about $85 per barrel.

Dangote Refinery, in a notice to customers, announced that all gantry transactions for PMS, diesel and aviation fuel would henceforth be settled in dollars, while Liquefied Petroleum Gas (LPG) transactions would remain under the existing payment arrangement.

Analysts believe the decision effectively transfers foreign exchange exposure from the refinery to petroleum marketers, who generate revenue in naira but must now source dollars before purchasing products.

Energy economist and founder of Energy Business Analytics, Dr. Kaase Gbako, said the policy could significantly increase demand for foreign exchange and expose consumers to more volatile fuel prices.

According to him, marketers are likely to pass the cost of sourcing foreign exchange and managing exchange-rate risks to motorists, resulting in higher retail fuel prices.

Professor Emeritus of Petroleum Economics, Wumi Iledare, described the development as consistent with a deregulated petroleum market but warned that marketers would need stronger treasury management and foreign exchange procurement strategies to remain competitive.

He added that fuel prices would increasingly be determined by three key factors: international crude oil prices, refining and logistics costs, and movements in the naira-dollar exchange rate.

Former President of the Nigerian Economic Society, Prof. Adeola Adenikinju, also warned that requiring marketers to source dollars through the banking system could intensify pressure on the foreign exchange market if liquidity remains constrained.

He noted that any further depreciation of the naira would not only increase fuel prices but also raise the cost of imported goods, adding to inflationary pressures across the economy.

Country Manager for Tradegrid, Jide Pratt, argued that although Dangote Refinery is legally permitted to transact in foreign currency because of its Free Trade Zone status, the return to dollar pricing raises fresh concerns about the sustainability of the Federal Government’s naira-for-crude initiative.

Pratt called for greater transparency regarding crude supply arrangements, insisting that products refined from crude supplied under the naira-for-crude programme should ideally continue to be sold in the local currency.

Managing Director of the Centre for the Promotion of Private Enterprise (CPPE), Dr. Muda Yusuf, identified currency mismatch as the biggest challenge facing marketers under the new regime.

He said businesses would now incur costs in dollars while earning revenue in naira, increasing their exposure to exchange-rate volatility.

Industry groups have also expressed concern over the policy. The Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN) questioned whether marketers would now depend on the Central Bank of Nigeria for dollar supplies to purchase products refined locally.

Similarly, the Independent Petroleum Marketers Association of Nigeria (IPMAN) said independent marketers could struggle to source sufficient foreign exchange, warning that the development may ultimately translate into higher pump prices for consumers.

Stakeholders said while the move reflects commercial realities in a fully deregulated market, it also raises fresh questions about the effectiveness of the naira-for-crude policy, foreign exchange stability and Nigeria’s broader objective of strengthening domestic refining and reducing dependence on imported petroleum products.