Why is Dangote Refinery Selling Petrol in Dollars? 

Dangote Petroleum Refinery has introduced dollar-denominated prices for petrol, diesel and aviation fuel, ending naira payments for most refined petroleum products purchased from the facility.

Petroleum marketers will now need access to foreign exchange when buying products directly from the refinery. It also creates a stronger link between Nigeria’s domestic fuel prices, the naira-dollar exchange rate and movements in international crude oil prices.

The refinery fixed its ex-depot price for Premium Motor Spirit, popularly called petrol, at $0.779 per litre. Diesel was priced at $1.087 per litre, while aviation fuel was priced at $0.942 per litre. The new structure took effect on July 13, 2026. Liquefied Petroleum Gas transactions were excluded from the dollar-pricing arrangement.

Why Dangote Refinery moved from naira to dollars

A refinery purchases crude oil, processes it and sells the resulting products. Problems can arise when most of its crude oil is purchased in dollars while refined products are sold in naira.

If the naira weakens between the time crude oil is purchased and the time the finished products are sold, the refinery may lose value when converting its naira revenue back into dollars.

Dangote Refinery initially accepted naira payments after the Federal Government introduced the naira-for-crude arrangement in 2024. The policy was designed to allow domestic refiners to buy Nigerian crude in naira, reduce demand for foreign exchange and stabilise local fuel prices.

However, reports indicate that a growing proportion of the refinery’s crude supply is now being purchased under dollar-denominated arrangements. The refinery consequently moved its product sales into the same currency used for much of its feedstock.

From a corporate finance perspective, the decision reduces Dangote Refinery’s foreign exchange exposure. It allows the company to match its dollar costs with dollar revenue and protect its margins from sudden currency depreciation.

What the change means for petroleum marketers

Large marketers with established banking relationships, export earnings or access to official foreign exchange channels may adjust more easily. Smaller independent marketers could face greater difficulty, particularly during periods of limited dollar liquidity.

The change may also increase marketers’ working-capital requirements. A company that previously raised naira financing to buy fuel may now need a foreign exchange facility or a mechanism for converting naira into dollars before lifting products.

Banks could respond by developing specialised trade-finance and foreign exchange products for petroleum marketers. However, the cost of obtaining those facilities may eventually be transferred to consumers.

Will petrol prices rise because of the decision?

Dollar pricing does not automatically mean that petrol prices will rise every day. However, it introduces clearer exposure to exchange-rate movements.

At an official exchange rate of about ₦1,380 to the dollar, a refinery price of $0.779 translates to approximately ₦1,075 per litre before logistics, financing, insurance, distribution costs and marketers’ margins are added.

The final pump price will depend on the exchange rate used by marketers, the cost of transporting products, competition among suppliers and changes in international crude oil prices.

A stronger naira could reduce the naira equivalent of the refinery price. A weaker naira would produce the opposite result.

This means Nigerian fuel consumers may now feel the impact of currency volatility more directly, even though the country has expanded its domestic refining capacity.

Does this weaken the naira-for-crude policy?

The development raises questions about the effectiveness and sustainability of the naira-for-crude programme.

The policy can only function efficiently when domestic refiners receive a predictable quantity of crude oil in naira. If refiners still need dollars to purchase a significant share of their feedstock, selling products in naira becomes commercially difficult.

The government must therefore decide whether to strengthen crude supply under the naira arrangement or allow a fully market-driven system in which crude and refined products are priced in internationally accepted currencies.