Dangote Petroleum Refinery has announced a temporary suspension of petroleum product sales in Naira, citing a mismatch between sales proceeds and crude oil purchase obligations, which are denominated in U.S. dollars.
“This decision is necessary to avoid a mismatch between our sales proceeds and our crude oil purchase obligations, which are currently denominated in US dollars,” the company said in a statement on Wednesday.
The refinery’s management stated that sales in Naira have exceeded the value of Naira-denominated crude received, necessitating an adjustment to align sales currency with procurement currency.
The company emphasized its commitment to the Nigerian market and indicated that sales in Naira would resume upon receiving Naira-denominated crude allocations from the Nigerian National Petroleum Company Limited (NNPCL).
This development could increase petrol prices and weaken the Naira, as local fuel traders may need to source U.S. dollars for transactions.
The refinery’s decision underscores challenges in securing sufficient crude volumes under the existing government arrangement that allows payment in Naira.
Discussions between NNPCL and Dangote Refinery are ongoing to potentially renew the crude-for-Naira agreement, which began in October and was initially set for six months.
