Following the suspension of petroleum product sales in naira by the Dangote Petroleum Refinery, some fuel marketers have begun stockpiling Premium Motor Spirit (PMS), commonly known as petrol. The move is driven by speculations that petrol prices will soon rise due to the breakdown of the naira-for-crude agreement between the Federal Government and the refinery.
The Independent Petroleum Marketers Association of Nigeria (IPMAN) has, however, cautioned retailers against panic buying, warning that they could suffer heavy financial losses if the situation is resolved and prices drop. According to IPMAN’s National Publicity Secretary, Chinedu Ukadike, depot owners have taken advantage of the uncertainty to increase their prices, further complicating the situation for marketers and consumers.
Dangote Refinery Cites Dollar Constraints for Suspension
Last week, the Dangote refinery, which has a processing capacity of 650,000 barrels per day, announced that it had halted sales in naira due to an imbalance between its sales revenue and crude oil procurement costs. The refinery explained that while it had been selling its products in naira, the crude oil it purchased from the Nigerian National Petroleum Company Limited (NNPCL) was priced in US dollars.
In an official statement, the refinery noted that its naira-based sales had surpassed the value of the crude it received under the naira-for-crude arrangement. To avoid financial mismatches, the refinery said it had no choice but to adjust its sales currency to match its crude procurement currency. This announcement immediately triggered a rise in fuel loading costs at private depots in Lagos, with prices surging from below N850/litre to about N900/litre.
IPMAN Accuses Depot Owners of Profiteering
As fears of a petrol price increase spread, IPMAN accused depot owners of hoarding and inflating prices for profit. Ukadike condemned the actions of these depot operators, warning that their speculative pricing could destabilize the market. He advised independent marketers to avoid stockpiling fuel in response to the current uncertainty.
Ukadike also warned that if the situation stabilizes and Dangote refinery reduces prices, those who purchased large volumes of petrol at inflated rates could suffer financial losses. “Some marketers are stockpiling PMS in the hope that prices will rise, but that is risky. If Dangote refinery resumes normal sales and crashes prices, these marketers will lose money,” he said.
Federal Government, Dangote Resume Negotiations
In an effort to resolve the impasse, the Federal Government and the Dangote refinery are set to resume discussions today on the naira-for-crude agreement. A source from the Federal Ministry of Finance revealed that the Technical Sub-Committee on the Naira-for-Crude Policy would be meeting to explore possible solutions. The Nigerian Upstream Petroleum Regulatory Commission has also been tasked with reviewing options for reviving the deal.
NNPCL, which has struggled with crude supply constraints due to its forward sales of oil to secure loans, has been under pressure to resolve the crisis. Industry experts warn that the halt in naira-based sales could put additional strain on the foreign exchange market, as petroleum dealers would now need to source large amounts of US dollars to purchase products from the Dangote refinery.
Fears of Monopolistic Practices and Fuel Importation Resurgence
Industry players have expressed concerns that stopping the naira-for-crude deal might be an attempt to weaken the Dangote refinery’s influence and restore fuel importation dominance. Some downstream sector operators suspect that international oil companies (IOCs) are deliberately making crude procurement difficult for the Dangote refinery to maintain control over Nigeria’s fuel supply chain.
Domestic crude oil refiners have also criticized the decision to suspend naira sales, calling it a move that undermines energy security. The Crude Oil Refinery Owners Association of Nigeria warned that this setback could force Nigeria back into full dependence on fuel imports, reversing efforts to boost local refining capacity.
As negotiations between the government and the Dangote refinery continue, the outcome of the talks will determine whether fuel prices will stabilize or increase, affecting millions of Nigerians who rely on petrol for daily transportation and business operations
Table of Contents
Discover more from OGM News NG
Subscribe to get the latest posts sent to your email.
