Dangote Refinery Announce The Use Of Dollars In Petrol Sales.

The Dangote Petroleum Refinery, a monumental $20 billion project owned by Africa’s richest man, Aliko Dangote, is located in the Lekki Free Zone near Lagos, Nigeria.

As the largest single-train refinery in the world, it was heralded as the solution to Nigeria’s long-standing dependence on imported petroleum products, promising to meet domestic demand and even generate surplus for export. Its commencement of operations was seen as a pivotal moment for the Nigerian economy.

The Announcement

The refinery’s Head of Oil and Gas, Devakumar Edwin, made the statement on Tuesday, revealing a significant shift in policy. He cited that the refinery’s primary obligation is to repay its lenders, who financed the project in U.S. dollars.

Therefore, to generate the necessary foreign exchange, the refinery must sell its products in dollars. Edwin explained,

“We have no choice but to sell our petrol in dollars because our loans are denominated in dollars. It’s a straightforward business decision; we need dollars to import crude oil and to service our debt.”

The sudden change stems from the complex economics of the operation. While the refinery uses Nigerian crude, it must purchase it from the international oil companies (IOCs) operating in Nigeria, who also demand payment in U.S. dollars.

This creates a cycle where the refinery needs dollars to buy crude to produce petrol, making naira payments unsustainable for its core financial obligations.

However, The announcement has been met with widespread criticism and fear. For the average Nigerian, already grappling with a cost-of-living crisis, the prospect of fuel being priced in dollars is terrifying.

An energy analyst, Olufemi Wusu, stated,

“This move effectively shuts out the local currency and places the burden of forex volatility squarely on the Nigerian consumer. It defeats the purpose of having a local refinery if the product is priced as an import.”

Social media is flooded with expressions of outrage and despair. A taxi driver in Lagos, who gave his name as Chukwudi, voiced the concerns of millions:

“How does this help us? We celebrated when this refinery was built, thinking fuel will be cheaper and more available. Now they are telling us to pay in dollars? Where will we get dollars? This is a big disappointment.”

Conclusion

The Dangote Refinery’s decision to suspend naira petrol sales represents a harsh economic reality check for Nigeria. While sound from a business perspective for the company, it undermines a key national expectation,energy security and affordability in the local currency.

The situation highlights the country’s deeper issues with dollar dependency, even for its own natural resources. The refinery, once a symbol of national pride and self-sufficiency, now risks being viewed as an offshore entity within the nation’s borders, operating by rules that exclude the majority of its citizens.

Does this decision signal a failure of the original vision for the refinery, and what does it mean for Nigeria’s ambition to become a net exporter of refined petroleum products?

Ultimately, how will the majority of Nigerians, who earn and spend in naira, survive in an economy where an essential commodity like fuel is effectively priced as a luxury import?

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