The Dangote Petroleum Refinery has suspended the sale of Premium Motor Spirit, popularly known as petrol, in naira, directing marketers to pay in United States dollars for all purchases of petroleum products.
PLATFORM TIMES gathered that the new pricing policy, which took immediate effect, covers Premium Motor Spirit (PMS), Automotive Gas Oil (AGO), also known as diesel, and Aviation Turbine Kerosene (ATK), for both gantry and coastal product sales.
Industry sources familiar with the development said the refinery adopted the measure to reduce its growing foreign exchange exposure following an increasing reliance on dollar-denominated crude oil purchases.
A senior industry source disclosed that the refinery now receives a larger share of its crude supplies from the Nigerian National Petroleum Company Limited under dollar-based arrangements, while much of its refined products had continued to be sold in naira.
The source said the disparity between dollar-denominated crude procurement and naira-based product sales had exposed the refinery to significant exchange rate risks.
“The decision takes effect immediately. All PMS, AGO and ATK sales, both gantry and coastal, are now dollar-based,” the source said.
It was further learnt that the refinery had circulated a memo notifying marketers of the new payment arrangement.
Another official attributed the decision to persistent volatility in Nigeria’s foreign exchange market and fluctuations in international crude oil prices.
According to the official, the refinery now receives fewer crude cargoes under the Federal Government’s naira-for-crude initiative than required for its operations.
“While we require more than 15 cargoes of crude monthly for our operations, the NNPCL is struggling to supply three cargoes in naira under the naira-for-crude arrangement,” the official said.
The development is expected to have far-reaching implications for Nigeria’s downstream petroleum sector, with analysts warning that it could increase demand for foreign exchange, raise fuel distribution costs and exert fresh pressure on pump prices.
An oil and gas analyst, Tunji Oyebanji, said the latest move suggests that the naira-for-crude arrangement is failing to meet the refinery’s crude supply requirements.
According to him, Nigeria’s limited crude oil production, existing forward-sale commitments and obligations to international buyers have constrained the volume of crude available for domestic refining.
He noted that the refinery would increasingly depend on imported crude paid for in dollars, making dollar-denominated sales of refined products almost inevitable.
Oyebanji warned that the policy could intensify demand for the US dollar and further weaken the naira if sustained.
The Dangote Refinery, with a capacity of 650,000 barrels per day, is Nigeria’s largest refining facility and a major supplier of petroleum products to the domestic market. Industry observers say its latest pricing policy could reshape fuel pricing dynamics across the country if other market players adopt similar measures.
Source : Daily Trust
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