Nigeria’s Dangote Petroleum Refinery has paused the sale of petroleum products in the country after halting the receipt of naira-denominated crude shipments from the state-owned Nigerian National Petroleum Company (NNPC). In a statement released on Wednesday, the refinery explained that it was temporarily suspending sales in naira to avoid a mismatch between its sales proceeds and crude oil purchase obligations, which are currently in U.S. dollars. The statement further highlighted that Dangote’s petroleum product sales in naira had already exceeded the value of the naira-denominated crude it had received, necessitating the adjustment to its sales currency.
The refinery’s decision follows a significant milestone in Nigeria’s energy sector. In 2024, the Dangote Oil Refinery began refining gasoline and selling it locally to NNPC, marking the first time in decades that the country, Africa’s largest oil producer, was refining its own crude. The $20.5 billion refinery, launched in January 2024, began gasoline production in September. With a capacity to process 650,000 barrels of crude per day, it is larger than any refinery in Europe and well-equipped to meet Nigeria’s domestic fuel needs.
The refinery’s impact on Nigeria’s economy has been significant, as it has been buying crude and selling refined fuel in the local currency. This has helped the country save much-needed foreign exchange, particularly U.S. dollars.
However, the refinery’s operation has coincided with a shift in Nigeria’s energy policies. Since the 1970s, NNPC has subsidized local fuel prices, gradually reducing these subsidies through lower royalty payments to the Nigerian treasury. In 2023, newly elected President Bola Tinubu ended the fuel subsidy, which had cost the government $10 billion—over 40% of its total tax revenue. In addition, Tinubu allowed market forces to determine the naira’s value, abandoning the policy of artificially supporting the currency. As a result, Nigerians are now paying approximately $2.30 per gallon of gasoline, a price still low by U.S. standards but three times higher than it was just a few years ago.
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