By Obas Esiedesa, Abuja
Oil marketers have warned that petrol pump prices may rise in the coming days following Dangote Refinery’s decision to suspend the sale of petroleum products in Naira to the domestic market.
The refinery had been in discussions with the Federal Government over renewing its six-month crude-for-Naira agreement with NNPC Limited.
The deal, which was set to expire this month, was reportedly terminated by the national oil company two weeks ago. Negotiations between the government and the involved parties ended without an agreement in Abuja on Tuesday.
Dangote Refinery in a statement on Wednesday said: “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.
“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.
“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.
“We remain committed 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”.
Speaking to Vanguard on the impact of Dangote’s decision, the Public Relations Officer, Independent Petroleum Marketers Association of Nigeria, IPMAN, Chief Chinedu Ukadike said pump price would likely go up due to the cost of sourcing foreign exchange to pay for the product.
He pointed out that marketers may also resort to selling their petroleum products in dollars as the currency has now become the means of exchange in Nigeria.
“The pressure on dollar will increase because it has become the means of exchange. Marketers will begin to sell petrol at filling stations in dollars. And this will have negative impact on the prices of petroleum products across the country.
“We don’t want to cause panic in the energy industry but what we are seeing now is not encouraging. Any increase in cost will be passed on to consumers eventually”, he added.
He said the marketers were informed that the crude for Naira deal ended March 1, 2025, contrary to claims made by government officials.
The Minister of State for Petroleum Resources (Oil), Senator Heineken Lokpobiri, had told journalists last weeek that the Naira-for-Crude deal between NNPC Limited and Dangote Refinery remained intact and has not been canceled.
He pointed out that the agreement as was approved by the Federal Executive Council (FEC), was still in effect.
Lokpobiri stated that while NNPC operates a private sector model, the government still has limited control over major decisions, adding that operators in the oil and gas industry were free to transact business in any currency.
According to him, “Government is not canceling it. What was taken to council was a pilot scheme where they said NNPC should be selling crude in Naira to Dangote Refinery. We’ve always encouraged people to buy crude in whatever currency. Even if you buy in Naira, it’s going to be at a prevailing exchange rate.
And I do know that people have been buying crude to refine in their respective local refineries in Naira.
“The dispute has always been, what is the exchange rate? Which the government is not involved. It is purely private sector issue. If you are in the upstream and you have a modular refinery next to you and the man wants to buy crude, it’s between two of you that would negotiate and agree on what price. And the person may decide to pay you either in dollars or in Naira.
“We’ve always done that. So it is not true that the scheme is canceled. Not at all. That one that was taken to FEC was a scheme specifically for Dangote Refinery and they said orders will also follow. And that was why that one didn’t include the crude for Naira from IOCs and other operators. It was basically only NNPC”.
On his part, NNPC Limited also clarified that the contract for the sale of crude oil in Naira was structured as a six-month agreement, subject to availability, and expires at the end of March 2025.
It added that “discussions are currently ongoing towards emplacing a new contract.
Under this arrangement, NNPC has made over 48 million barrels of crude oil available to Dangote Refinery since October 2024. In aggregate, NNPC has made over 84 million barrels of crude oil available to the Refinery since its commencement of operations in 2023.
“NNPC Limited remains committed to supplying crude oil for local refining based on mutually agreed terms and conditions.”
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