Dangote Refinery Suspends Sale of Petroleum Products in Naira

Dangote Petroleum Refinery has announced a temporary suspension of the sale of petroleum products in Naira, citing the need to align its sales currency with crude oil procurement obligations, which are currently denominated in U.S. dollars.

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Temporary Suspension Due to Currency Mismatch

The announcement was made in a notice sent to petroleum marketers on Wednesday afternoon. According to the company, the decision was necessary to avoid financial misalignment, as the refinery’s crude oil purchases are conducted in dollars while its sales have been largely in Naira.

“We wish to inform you that Dangote Petroleum Refinery has temporarily halted the sale of petroleum products in Naira. 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 notice read.

Dangote Refinery explained that it has, so far, sold more petroleum products in Naira than the value of Naira-denominated crude oil it has received, making the adjustment necessary.

Refinery Denies Fraud Allegations

The company also addressed rumors circulating online that suggested it had stopped loading petroleum products due to an incident of ticketing fraud. Dangote Refinery dismissed these claims as false and misleading, emphasizing that its operational systems remain secure and efficient.

“Our attention has also been drawn to reports on the internet claiming that we are stopping loading due to an incident of ticketing fraud. This is malicious falsehood. Our systems are robust, and we have had no fraud issues,” the statement clarified.

Resumption Dependent on NNPC Crude Allocation

The refinery reassured marketers and the Nigerian public that it remains committed to serving the domestic market efficiently and sustainably. It also confirmed that once it receives an allocation of Naira-denominated crude cargoes from the Nigerian National Petroleum Corporation (NNPC), it will resume selling petroleum products in Naira.

“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,” the notice concluded.

Implications for the Nigerian Market

The suspension of Naira-based transactions by Dangote Refinery could have a significant impact on petroleum pricing and supply in Nigeria. The refinery is a key player in the country’s efforts to achieve self-sufficiency in fuel production, reducing dependence on imports.

However, with crude oil purchases being primarily conducted in U.S. dollars, this move highlights the challenges faced by local refineries in balancing domestic pricing with international procurement costs. The situation also raises concerns about the availability of foreign exchange and its impact on the broader petroleum market in Nigeria.

Stakeholders in the oil and gas sector will be closely watching for developments, particularly whether the federal government and NNPC will intervene to facilitate Naira-based crude allocations to Dangote Refinery to ensure continued supply at stable prices.