Dangote ends naira fuel sales, pegs petrol at $0.779 per litre in major pricing shift

Dangote ends naira fuel sales, pegs petrol at $0.779 per litre in major pricing shift

Dangote Petroleum Refinery has officially transitioned to United States dollar-denominated sales of refined petroleum products, ending naira-based transactions for most products and introducing a new pricing regime expected to significantly influence fuel prices, petroleum marketers and Nigeria’s deregulated downstream oil sector.

Under the new pricing template, which took effect on Monday, July 13, 2026, the refinery fixed the ex-depot price of Premium Motor Spirit (PMS), popularly known as petrol, at $0.779 per litre. It also pegged the price of Automotive Gas Oil (AGO), commonly known as diesel, at $1.087 per litre, while aviation fuel (Jet A-1) will now sell at $0.942 per litre. Coastal deliveries of petrol have also been priced at $1,044.62 per metric tonne.

The development marks one of the most significant commercial policy changes by the 650,000 barrels-per-day Dangote Refinery, effectively ending the naira-denominated fuel sales introduced under the Federal Government’s naira-for-crude initiative, which commenced on October 1, 2024, to encourage domestic refining, reduce pressure on Nigeria’s foreign exchange reserves and stabilise fuel prices.

In a circular issued to petroleum marketers and customers, the refinery announced that all previously issued naira-denominated Proforma Invoices (PFIs) and Deal Recaps for both gantry and coastal transactions had become invalid following the transition to dollar transactions.

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The notice, signed by the refinery’s Group Commercial Operations, instructed customers not to make payments against any cancelled naira invoices, stating that all future purchases would be settled exclusively in United States dollars.

According to the refinery, the revised pricing structure applies to petrol, diesel and aviation fuel, while Liquefied Petroleum Gas (LPG) remains exempt and will continue under its existing payment arrangement.

Industry experts say the transition reflects changing commercial realities facing the refinery, particularly the increasing use of dollar-denominated crude oil supply contracts.

Sources familiar with the development explained that although the refinery previously sold a substantial volume of its refined petroleum products in naira, a growing percentage of the crude oil it processes is now being purchased in dollars.

The resulting mismatch between procurement costs and sales revenue reportedly exposed the refinery to significant foreign exchange risks, especially amid persistent volatility in global crude oil prices and fluctuations in the naira exchange rate.

One senior industry source said the imbalance had become increasingly difficult to sustain.

“Dangote Refinery is receiving fewer naira-denominated crude cargoes while more crude supplies are being paid for in dollars. Continuing to sell refined products largely in naira created significant exchange-rate exposure that became commercially unsustainable.”

Energy analysts believe the refinery’s latest decision aligns its operations with international petroleum trading standards, where crude oil and refined petroleum products are predominantly traded in US dollars.

They note that the new policy is expected to improve the refinery’s financial stability by reducing exchange-rate losses while enhancing its competitiveness in regional and international export markets.

However, the move is also expected to have important implications for Nigeria’s downstream petroleum sector.

Since independent marketers and bulk distributors will now purchase products in dollars, foreign exchange movements are expected to play a more direct role in determining wholesale fuel prices.

Although the refinery has introduced dollar benchmark prices, industry stakeholders emphasise that Nigerians will continue to buy petrol at filling stations in naira.

Retail pump prices will therefore depend on several variables, including the prevailing naira-to-dollar exchange rate, international crude oil prices, transportation and logistics costs, depot charges, regulatory fees, taxes and marketers’ operating margins.

The policy shift has also reignited debate over the future of the Federal Government’s naira-for-crude programme, which was designed to encourage domestic refining, reduce dependence on imported petroleum products and conserve scarce foreign exchange.

Industry observers say the effectiveness of the policy has weakened in recent months as increasing volumes of crude supplied to local refiners gradually reverted to dollar-based transactions.

Some analysts argue that unless crude oil allocations to domestic refineries are consistently supplied under naira-based arrangements, maintaining naira-denominated fuel sales may become increasingly difficult.

Since commencing commercial production, Dangote Petroleum Refinery has rapidly become Nigeria’s largest producer and supplier of refined petroleum products, significantly reducing the country’s reliance on imported petrol, diesel and aviation fuel.

The refinery has also expanded exports to several African countries, positioning Nigeria as an emerging regional refining hub.

Market analysts believe the transition to dollar pricing further integrates the refinery into the global petroleum market and reinforces the growing influence of international oil prices and exchange-rate stability on domestic fuel costs.

While marketers are expected to adjust to the new commercial framework, economists say exchange-rate management will now play an even more critical role in determining the affordability of fuel for Nigerian consumers.

The latest development underscores the increasing importance of macroeconomic stability, foreign exchange liquidity and crude oil supply arrangements in shaping the future of Nigeria’s deregulated petroleum market.

Dangote ends naira fuel sales, pegs petrol at $0.779 per litre in major pricing shift