Petrol marketers in Nigeria may have to start selling fuel in dollars following Dangote Petroleum Refinery’s decision to halt Naira-based sales. This comes after the expiration of the Naira-for-Crude arrangement between the federal government and local refineries.
Chinedu Ukadike, the National Publicity Secretary of the Independent Petroleum Marketers Association of Nigeria (IPMAN), expressed concern over the move. He warned of its impact on pump prices and foreign exchange.
“I was taken aback (by the announcement by Dangote), I thought that we had forgone that era whereby the issue of the Naira had been settled between the federal government and Dangote,” Ukadike said in an interview with Nairametrics. “It is quite unfortunate that after the federal government has stabilized the Naira to crude issue, we are still talking about it again.”
He explained that if marketers must buy in dollars, selling in dollars may become inevitable.
“…as marketers if we are going to be buying petroleum products in dollars, it means that we will also sell in dollars. Because we must pass the bulk to the final consumer. Whatever happens in the distribution chain goes to the pump,” he stated.
Ukadike also warned about the pressure this move could place on Nigeria’s foreign exchange market.
“So it will really put pressure on Naira. It’s not good for our economy,” he said.
He noted that marketers are concerned about the decision, questioning how they would handle currency conversions.
“Are we going to buy in dollars, sell in Naira and then convert again to dollars to go and buy? We are not conversion centers. So I believe it is very pertinent to address that issue. If not, it will further degrade our Naira and put serious pressure on the foreign exchange.”
Despite these concerns, Ukadike hopes that the Naira-for-Crude arrangement will be reconsidered and that the Nigeria National Petroleum Company Limited (NNPCL) will continue selling products in Naira.
“If NNPC would sell to us in Naira, we will also buy in Naira. But I am hopeful that it will be resolved soon,” he said.
Earlier this week, Dangote Petroleum Refinery justified its decision, citing an imbalance between its dollar-denominated crude oil costs and Naira-based sales revenue. It explained that its Naira sales had exceeded the value of Naira-priced crude received so far.
The outcome of ongoing discussions will determine whether petrol prices remain stable or if Nigerians will face further increases due to currency fluctuations.
