The Petroleum Products Retail Outlets Owners Association of Nigeria has warned that Nigeria’s downstream petroleum market could become increasingly vulnerable to price distortions and foreign exchange shocks following Dangote Petroleum Refinery’s decision to suspend naira-denominated sales of refined products.
The marketers’ body said the development reinforces the urgent need for the Federal Government to revive the Port Harcourt, Warri and Kaduna refineries to provide competition, strengthen energy security and prevent overdependence on a single domestic supplier.
The warning comes as the country’s largest refinery switched to dollar-based transactions after the effective collapse of the Federal Government’s crude-for-naira initiative, a policy introduced to shield local refiners from exchange-rate volatility, conserve foreign exchange and moderate domestic fuel prices.
Under the new pricing template, Dangote Refinery fixed the gantry price of Premium Motor Spirit at $0.779 per litre, diesel at $1.087 per litre and aviation fuel at $0.942 per litre. At the prevailing official exchange rate of about N1,376.54 to the dollar, the prices translate to approximately N1,072 per litre for petrol, N1,497 for diesel and N1,297 for aviation fuel before transportation, storage and retail margins.
The refinery also priced coastal deliveries of petrol at $1,044.62 per metric tonne and cancelled all previously issued naira-denominated Proforma Invoices and Deal Recaps, effectively ending local currency transactions for marketers.
Although pump prices remained largely unchanged on Wednesday, with NNPC Retail selling petrol at about N1,118 per litre in Lagos, AP at N1,120, Bovas at N1,132 and North-West stations at about N1,160. Industry operators, however, warned that continued depreciation of the naira could quickly feed into higher retail prices.
PETROAN National President, Dr. Billy Gillis-Harry, said the shift to dollar pricing exposes independent marketers to significant foreign exchange risks because their revenues are earned almost entirely in naira while fuel purchases may now require scarce dollars.
He said the development would increase operating costs, tighten working capital, complicate access to foreign exchange and ultimately threaten affordability for consumers.
While reaffirming PETROAN’s support for a deregulated downstream petroleum market, Gillis-Harry stressed that deregulation can only deliver its intended benefits where there is genuine competition rather than dependence on one dominant refinery.
He urged the Group Chief Executive Officer of the Nigerian National Petroleum Company Limited, Bayo Ojulari, to immediately restart temporary production at the Port Harcourt, Warri and Kaduna refineries pending the completion of negotiations with prospective Chinese technical partners expected to undertake their rehabilitation.
According to him, the three government-owned refineries were producing before their shutdown in May 2025 and could quickly boost domestic supply, moderate price volatility and serve as an effective counterweight in the market.
“Operational government-owned refineries will provide an effective price-check mechanism against excessive pricing, create healthy competition among domestic refiners, reduce pressure on foreign exchange by increasing local refining capacity, strengthen Nigeria’s energy security and improve public confidence in the country’s refining capability,” Gillis-Harry said.
The latest development has also reignited debate over the future of the crude-for-naira policy, which many analysts viewed as one of the Federal Government’s most important interventions in the downstream sector after fuel subsidy removal.
By allowing domestic refiners to buy Nigerian crude in naira, the policy reduced refiners’ exposure to exchange-rate volatility, lowered demand for dollars and helped cushion the impact of the naira’s depreciation on domestic fuel prices.
Energy analyst Dr. Joseph Obele urged the Federal Government to expand rather than abandon the initiative, arguing that consistent crude supply to domestic refineries remains critical to achieving energy security and stabilising the foreign exchange market.
He also called on NNPCL to allocate more crude oil to local refiners to reduce dependence on imported feedstock and sustain naira-based transactions.
The policy debate comes at a delicate period for Nigeria’s economy as global crude prices continue to rise.
Brent crude extended gains for a fourth consecutive session to around $85 per barrel, supported by tightening global supplies and escalating geopolitical tensions in the Middle East.
Renewed hostilities involving the United States and Iran, including heightened military activity around the Strait of Hormuz a shipping corridor through which nearly one-fifth of global oil supplies pass, have injected a fresh geopolitical risk premium into international oil markets.
For Nigeria, the implications are mixed. Higher crude prices are expected to boost oil export earnings and government revenues but could simultaneously increase domestic refining costs and place additional pressure on pump prices if petroleum products continue to be priced in dollars.
Analysts say the episode highlights the strategic importance of diversifying Nigeria’s refining base. While the 650,000-barrels-per-day Dangote Refinery has dramatically reduced the country’s dependence on imported fuel, they argue that sustainable energy security and price stability will require multiple operational refineries, a predictable crude supply framework and a competitive downstream market that is not overly reliant on any single supplier.
