The suspension of petroleum product sales in naira by the Dangote Petroleum Refinery has caused concern among fuel marketers, leading some to stockpile Premium Motor Spirit (PMS), commonly known as petrol. The move comes after the Federal Government temporarily halted the sale of crude oil to the refinery in local currency, sparking fears of an imminent fuel price increase.
Retailers have been storing petrol in anticipation of a price surge, expecting that the suspension of the naira-for-crude arrangement will lead to higher costs. However, the Independent Petroleum Marketers Association of Nigeria (IPMAN) has cautioned against panic buying, warning that it could result in financial losses for marketers.
Last week, the Dangote refinery, which has a capacity of 650,000 barrels per day, announced that it would no longer sell petroleum products in naira due to issues with crude oil procurement. The refinery explained that while it had been selling in naira, the crude it purchased was denominated in US dollars, creating an imbalance.
“Dear valued customers, we wish to inform you that the 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 US 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,” the refinery stated.
Following this announcement, the cost of loading petrol at private depots in Lagos rose sharply to about N900 per liter, up from less than N850 per liter. This sudden increase has led to speculation that fuel prices at filling stations may soon follow suit.
Speaking on to PUNCH, IPMAN’s National Publicity Secretary, Chinedu Ukadike, noted that depot owners had raised their prices in response to the refinery’s decision. He criticized depot operators for profiting from the uncertainty, urging marketers not to buy large quantities of petrol at inflated prices.
“Some depot owners are already increasing the price. But we are also asking our marketers not to panic-buy. Because definitely when the Dangote refinery comes back and reverses the price, it will be a huge loss for these marketers. Depot owners are using this opportunity to profiteer. This is not good for the economy.
“Some marketers are also stockpiling PMS in a bid to increase the price based on the suspension of naira sales by the Dangote refinery. They speculate that the price will go higher and they will make more money from the fuel they are buying now. It may not be so. This issue will be resolved,” Ukadike stated.
He further warned that those buying fuel in bulk could face financial trouble if Dangote Refinery later reduces prices.
“We, the independent marketers, are asking our members not to buy so much goods because when they buy so much volume of fuel at a higher rate from the depot owners, at the end of the day, it might result in losing a lot of capital.
“Dangote may crash the price and most of them with high volumes of PMS will run into problems. So, all marketers should be careful to avoid losses,” he advised.
Meanwhile, discussions between the Federal Government and Dangote Refinery are ongoing to resolve the naira-for-crude disagreement. According to Ukadike, both parties are working towards a resolution that could see the return of crude sales in naira.
“I have gathered that the Federal Government and Dangote refinery are almost resolving this matter.
“The two of them are reviewing the naira-for-crude deal to continue the sale of crude oil in naira to the refinery again. But the official statement has not come out. We are waiting for the official statement,” he said.
Officials from the Federal Ministry of Finance and the Federal Ministry of Petroleum Resources have confirmed that a technical sub-committee on the naira-for-crude policy will meet today to discuss possible solutions. The Nigerian Upstream Petroleum Regulatory Commission has also been asked to present options for review.
Industry insiders suggest that the issue is not a permanent one, but rather a temporary setback. One source noted that the Nigerian National Petroleum Company Limited (NNPCL) had already committed large volumes of crude oil to international financial institutions, leaving limited supply for the local market.
Experts warn that if the impasse continues, it could put additional pressure on the foreign exchange market. With the refinery now requiring more US dollars to purchase crude, the demand for foreign currency is expected to rise, potentially weakening the naira further.
