Lagos — The Dangote Petroleum Refinery in Lagos announced on Wednesday that it was temporarily suspending fuel sales in the local currency, Naira, to avoid a mismatch between sales in naira and purchases of crude in dollars.
The decision by the 650,000-barrel-per-day Dangote refinery to sell its fuel in dollars, according to Reuters report, could lead to a hike in petrol prices and a weakening of the naira as local fuel traders scramble for greenbacks.
The refinery, located on the outskirts of Lagos, is Nigeria’s main refinery but has struggled to secure sufficient crude volumes under an arrangement by the Nigerian government to sell it crude in naira.
“To date, our sales of petroleum products in Naira has 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” Reuters quoted the company as saying in a statement.
It did not say how long the temporary suspension might last.
Last year, the Nigerian government agreed that state oil firm NNPC Ltd could sell crude to local refineries, including Dangote, in Naira for an initial period of six months from October, to ease crude supply constraints.
However, the Dangote refinery has said it was not getting agreed volumes while other refineries said they were not getting any at all.
NNPC stated last week that it was in talks with the Dangote refinery to renew the deal, though it is unclear if it will be extended.
NNPC did not immediately respond to a request for comment.
In a bid to end petrol imports, Dangote has cut its petrol price by more than 20% since December. Dangote has also gone to court to halt gasoline imports into Nigeria.
The Dangote refinery was built by Africa’s richest man, Aliko Dangote, and has been touted by analysts and government officials as having the potential to secure energy independence for Nigeria.
Nigeria is a major oil producer but has long been forced to import refined products.
