Dangote Refinery and Petrochemical Company Limited on Wednesday temporarily suspended the sales of petroleum products in naira, sparking fears of price hike and further depreciation of the local currency.
The decision by the Dangote Refinery comes amid reports of failed naira-for-crude talks between the refinery and the Nigerian National Petroleum Company Limited (NNPC).
In a statement on Wednesday, the management of Dangote Refinery said the decision was taken in order to avoid a mismatch between its sales proceeds and its crude oil purchase obligations.
“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 company explained to its customers.
“To date, our sales of petroleum products in Naira have exceeded the value of Naira-denominated crude we have received. As a result, we must temporarily adjust our sales currency to align with our crude procurement currency,” it said.
The refinery also dismissed as “a malicious falsehood” internet reports claiming that it was stopping loading due to an incident of ticketing fraud.
“Our systems are robust and we have had no fraud issues,” Dangote Refinery said.
The company reiterated its commitment 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,” it said.
It bears recalling that since October 2024, crude oil supplied to the Dangote Refinery by the NNPC has been priced in naira following President Bola Tinubu’s directive and the Federal Executive Council’s approval. The initial deal was supposed to last for six months. However, the deal was reported to have collapsed earlier in March due to “irreconcilable” differences bordering on product delivery and other issues. Whereas by the terms of the deal NNPC was expected to supply 385,000 barrels of crude oil to Dangote’s 650,000-bdp refinery, reports say constant low supply to the Lekki, Lagos-based refinery has compelled it to resort to importation.
In the second week of March, NNPC said talks were ongoing for a new naira-for-crude contract with local refiners. But then, reports emerged that the talks may have collapsed.
Now with the Dangote Refinery halting naira sales of petroleum products, analysts are raising fear of increase in prices of the products and further pressure on the foreign exchange market, which will ultimately result in further depreciation of naira against the dollar.
