KEY POINTS

• Dangote Refinery halts Naira sales, prompting fears of higher fuel prices.
• Oil marketers warn of the impact on fuel prices due to foreign exchange costs.
• Government clarifies the status of the crude-for-Naira agreement.

Oil marketers have warned that petrol pump prices may rise in the coming days after Dangote Refinery announced it would temporarily halt the sale of petroleum products in Naira.

The decision follows the termination of the refinery’s six-month crude-for-Naira agreement with NNPC Limited, which was set to expire this month.

Dangote Refinery stated that the halt was necessary to avoid a mismatch between its sales proceeds and its crude oil purchase obligations, which are currently denominated in U.S. dollars.

The refinery has been in discussions with the Federal Government to renew the agreement, but negotiations ended without a resolution earlier this week.

In a statement, the refinery clarified: “We wish to inform you that Dangote Petroleum Refinery has temporarily halted the sale of petroleum products in Naira.

This decision is necessary to align our sales currency with the currency in which we purchase crude oil.”

Dangote Refinery triggers warnings of higher petrol prices

Following the refinery’s decision, Chief Chinedu Ukadike, the Public Relations Officer for the Independent Petroleum Marketers Association of Nigeria (IPMAN), expressed concern that petrol prices may increase due to the cost of sourcing foreign exchange to pay for the products.

“The pressure on the dollar will increase because it has become the primary means of exchange.

Marketers may start selling petrol in dollars, which will eventually lead to higher costs at the pump,” Ukadike said.

According to Vanguard, he emphasized that while the industry doesn’t want to cause panic, the sitation is concerning.

He added, “Any increase in cost will eventually be passed on to consumers.”

Government clarifies crude-for-Naira deal status

There has been confusion surrounding the status of the crude-for-Naira deal between Dangote Refinery and NNPC.

The Minister of State for Petroleum Resources, Senator Heineken Lokpobiri, clarified that the agreement remains valid, despite reports to the contrary.

Lokpobiri explained that the deal, approved by the Federal Executive Council (FEC), was a pilot program for Dangote Refinery to purchase crude in Naira, but it was not meant to extend to other refineries.

The minister stated that while operators in the oil and gas industry are free to transact in any currency, the government had encouraged the purchase of crude in Naira.

Meanwhile, NNPC Limited confirmed that discussions are ongoing to establish a new contract for the sale of crude oil in Naira, which will continue to supply the refinery.