BREAKING: As Expected, Fuel Prices Rise As Dangote Demands US Dollar Payments [SEE NEW PRICES]
The cost of Premium Motor Spirit (PMS), commonly known as petrol or fuel, has reportedly risen by more than ₦100 per litre at some facilities following a recent decision at Dangote Refinery.
Naijaonpoint Nigeria reports that this is because petroleum marketers may require about $1.84 billion every month to purchase petrol, diesel and aviation fuel from the Dangote Petroleum Refinery following the company’s decision to begin pricing its refined products in United States dollars.
Energy analysts and downstream operators have warned that the new arrangement could increase demand for foreign exchange, test liquidity in Nigeria’s currency market and expose consumers to more frequent fluctuations in fuel prices.
The development has already coincided with sharp increases in the prices of petroleum products at depots, with the cost of Premium Motor Spirit, popularly called petrol, rising by more than ₦100 per litre at some facilities.
Industry stakeholders said the dollar-based sales policy would place additional pressure on marketers, whose revenues are earned in naira but who must now source foreign currency to buy products from the country’s largest refinery.
Although the dollars sourced by marketers would be paid to a domestic refinery rather than overseas suppliers, reducing the risk of significant foreign exchange leakage, experts said the fragmented nature of the downstream market could still put considerable pressure on available FX liquidity.
Marketers Face $60.7 Million Daily Demand
Calculations based on current national consumption and supply figures showed that marketers may need an estimated $60.7m daily to buy petrol, diesel and aviation fuel from the refinery.
Petrol accounts for the largest portion of the projected demand.
At Dangote refinery’s new gantry price of $0.779 per litre, marketers would require about $36.9m daily to purchase PMS. This translates to approximately $1.1bn every month.
For Automotive Gas Oil, commonly known as diesel, the refinery announced a price of $1.087 per litre. Based on existing supply volumes, marketers would need about $20.4m daily or approximately $633.5m monthly.
Aviation Turbine Kerosene was priced at $0.942 per litre. With the average daily supply estimated at 3.6 million litres, aviation fuel purchases could require an additional $3.4m daily or about $105.1m monthly.
The combined monthly requirement for the three products is estimated at $1.84bn.
Analysts said the arrangement would test how quickly the foreign exchange market and financial institutions could respond to substantial, short-notice dollar demands from numerous downstream operators.
Petrol Depot Price Rises By ₦113
Following the refinery’s announcement, the depot price of petrol reportedly climbed from about ₦1,137 to as high as ₦1,250 per litre at some facilities, representing an increase of ₦113.
Sahara, AIPEC and African Terminal were also reported to have adjusted their petrol loading prices from ₦1,090 to between ₦1,120 per litre.
Diesel prices also increased, with ex-depot rates rising to as high as ₦1,650 per litre at some facilities. This represented an increase of up to ₦150 per litre.
The price adjustments came only days after the Federal Government called for a reduction in the cost of petrol.
They also followed an increase in international crude oil prices to about $85 per barrel, representing a rise of roughly $10 within the first two days of the week.
With depot prices already increasing, marketers warned that the additional costs could eventually be transferred to motorists, transporters, manufacturers and other consumers.
Dangote Cancels Naira Invoices
Dangote Petroleum Refinery had informed marketers that all payments for products lifted from its gantry would be made in dollars from July 13.
Following the directive, previously issued transactions invoiced in naira were cancelled, while further payments under those invoices were discontinued.
The refinery announced new dollar prices for products sold through its gantry, with PMS fixed at $0.779 per litre, diesel at $1.087 per litre and aviation fuel at $0.942 per litre.
Coastal petrol was priced at $1,044.62 per metric tonne.
The refinery, however, clarified that the change would not apply to Liquefied Petroleum Gas transactions, which would continue under their existing payment arrangement.
Customers were advised to comply with the revised guidelines in their subsequent dealings with the refinery.
Policy Shifts FX Risk To Marketers
The development effectively transfers a substantial portion of the foreign exchange burden from the refinery to downstream operators.
Marketers, who sell products and generate revenue in naira, will now have to obtain dollars before purchasing petrol, diesel or aviation fuel from the refinery.
The decision represents a major departure from the naira-based sales framework introduced after the Federal Government began the naira-for-crude initiative in October 2024.
The policy was designed to reduce pressure on Nigeria’s foreign exchange market, support local refining and improve the country’s energy security by allowing domestic refineries to purchase crude oil in naira and sell refined products in the local currency.
However, this is not the first time Dangote refinery has reverted to dollar pricing.
The refinery took a similar decision in April last year after complaining about inadequate crude oil supply under the naira-for-crude arrangement.
The decision was later reversed following discussions with the Federal Government.
Industry sources said the latest change could be linked to persistent difficulties in sourcing sufficient crude oil locally, forcing the refinery to increase its reliance on imported feedstock purchased in dollars.