‎Dangote’s shift to dollar fuel sales raise fresh fears of petrol price hike

‎The decision by Dangote Petroleum Refinery to begin selling petrol in dollars has sparked concerns among industry stakeholders that Nigerians could soon face another increase in fuel prices.
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‎The refinery announced a new dollar-based pricing template, fixing the ex-depot price of Premium Motor Spirit (PMS), also known as petrol, at $0.779 per litre, while diesel and aviation fuel prices have also been pegged to the US currency.
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‎The move marks a significant shift from previous naira-denominated transactions and comes amid ongoing challenges in Nigeria’s foreign exchange market.
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‎Analysts say the immediate impact on pump prices will depend largely on the exchange rate.
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‎Since marketers will now need dollars to purchase products from the refinery, any depreciation of the naira could translate into higher landing costs and eventually higher retail prices for consumers.
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‎Industry operators have already sounded the alarm. The Independent Petroleum Marketers Association of Nigeria (IPMAN) and the Crude Oil Refiners Association of Nigeria (CORAN) warned that the policy could increase pressure on fuel prices, particularly if marketers struggle to access foreign exchange at stable rates.
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‎The concern is rooted in the structure of Nigeria’s deregulated downstream market, where fuel prices are increasingly determined by market forces. Under a dollar-denominated system, fluctuations in the exchange rate become a major pricing factor, alongside crude oil prices and distribution costs.
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‎Market observers note that while the refinery’s new pricing model may reflect its need to align revenues with crude oil purchases that are largely settled in dollars, the policy could also increase demand for foreign exchange across the petroleum supply chain.
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‎Similar concerns were raised when the refinery previously suspended naira-based fuel sales, citing a mismatch between naira revenues and dollar-denominated crude procurement obligations.
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‎However, some analysts caution that a direct increase in pump prices is not guaranteed. If the naira remains relatively stable and global crude prices soften, marketers may be able to absorb some of the additional costs without passing the full burden to consumers. In addition, competition among fuel suppliers could help moderate price increases in the short term.
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‎Still, the prevailing view within the industry is that the shift to dollar sales introduces a new layer of exchange-rate risk into fuel pricing. With petrol remaining a critical driver of transportation and living costs, any sustained rise in the naira-dollar exchange rate could quickly be reflected at filling stations across the country.
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‎For consumers already grappling with inflationary pressures, the refinery’s latest policy may therefore signal a period of greater uncertainty in fuel pricing, even if an immediate pump price increase does not occur.
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