Nigerians may face a further increase in fuel prices following the decision by Dangote Petroleum Refinery to temporarily halt the sale of petroleum products in Naira.

In a statement released on Wednesday, the $20 billion Lagos-based refinery cited the need to align its sales revenue with crude oil procurement obligations, which are currently denominated in US dollars.

“This decision is necessary to avoid a mismatch between our sales proceeds and our crude oil purchase obligations, which are presently settled in US dollars,” the company stated.

Dangote Refinery explained that its Naira-denominated product sales had exceeded the value of the Naira-denominated crude it received from the Nigerian National Petroleum Company Limited (NNPCL). Consequently, the refinery has opted to adjust its sales currency to align with its procurement arrangements.

The company, however, reaffirmed its commitment to the Nigerian market, stating that it would resume selling petroleum products in Naira once it receives crude oil allocations in the local currency from the NNPCL.

“As soon as we receive an allocation of Naira-denominated crude cargoes from NNPC, we will promptly resume petroleum product sales in Naira,” the statement added.

The announcement comes amid an ongoing pricing dispute between Dangote Refinery and the NNPCL.

In July 2024, the Federal Executive Council (FEC) directed the NNPCL to sell crude oil to Dangote Refinery and other local refineries in Naira rather than US dollars to ease the strain on foreign exchange reserves and stabilise petroleum product prices.

At the start of March 2025, the NNPCL disclosed that its Naira-denominated crude sales agreement with Dangote Refinery was structured to last for six months, with an expiration date set for March 2025. The state-owned oil company confirmed that discussions were underway to renew the contract, adding that over 48 million barrels of crude oil had been supplied to Dangote Refinery since October 2024 under the Naira-based arrangement. It further stated that the private refinery had received more than 84 million barrels of crude oil since commencing operations in 2023.

Nigeria, Africa’s most populous nation, continues to grapple with significant energy challenges. For decades, the country’s state-owned refineries remained non-functional, leaving Nigeria heavily reliant on imported refined petroleum products, primarily supplied by the NNPCL.

Fuel shortages and long queues remain a common occurrence across the country, exacerbated by the removal of the petrol subsidy in May 2023 by President Bola Tinubu. The subsidy removal led to a sharp increase in petrol prices, rising from approximately ₦200 per litre to about ₦1,000 per litre, further straining household budgets amid an erratic electricity supply.

In December 2024, Dangote Refinery commenced operations with an initial processing capacity of 350,000 barrels per day, with plans to reach full capacity of 650,000 barrels per day by the end of 2025. Despite facing initial regulatory hurdles, the refinery has started supplying diesel and aviation fuel to Nigerian marketers, with petrol sales now affected by the currency dispute with the NNPCL.