Fuel Shock in Nigeria: Dangote Refinery’s Naira Sales Halt Sparks Hoarding and Panic Buying

The decision by the Dangote Petroleum Refinery to suspend the sale of petroleum products in naira has triggered a fresh wave of anxiety in Nigeria’s fuel market, as filling stations scramble to stockpile Premium Motor Spirit (PMS) in anticipation of price hikes.

Retailers, fearing imminent cost increases due to the government’s failure to sustain its crude oil sales to Dangote in local currency, have begun hoarding supplies. The Independent Petroleum Marketers Association of Nigeria (IPMAN) has issued a stark warning against panic buying, cautioning that those stockpiling fuel risk heavy financial losses.

Market Turmoil as Dangote Adjusts Sales Policy

Last week, the 650,000 barrels-per-day Dangote refinery announced a temporary halt on selling petroleum products in naira, citing a misalignment between its revenue and crude procurement costs, which remain denominated in US dollars.

“Dear valued customers, we wish to inform you that the Dangote Petroleum Refinery has temporarily halted the sale of petroleum products in naira. This decision is necessary to avoid a mismatch between our sales proceeds and our crude oil purchase obligations, which are currently denominated in US dollars,” the company stated.

The impact was immediate. Within days, private depots in Lagos increased their loading price for petrol to nearly N900 per litre, up from less than N850 before the announcement. This price surge has rippled through the downstream petroleum sector, as uncertainty looms over how independent marketers will secure supply under the new terms.

A Frenzy of Speculation and Stockpiling

Speaking on Sunday, IPMAN’s National Publicity Secretary, Chinedu Ukadike, criticised depot owners for exploiting the situation. He noted that since Dangote’s announcement, demand for PMS has risen sharply, encouraging depot owners to hike prices in a bid for greater profits.

“Some marketers are also stockpiling PMS in a bid to increase the price based on the suspension of naira sales by the Dangote refinery. They speculate that the price will go higher and they will make more money from the fuel they are buying now. It may not be so. This issue will be resolved,” Ukadike asserted.

He advised dealers against purchasing excessive volumes of fuel, warning that Dangote might later reduce prices, leading to potential losses.

Government Scrambles for a Resolution

The Nigerian government has remained notably silent since the announcement, leaving market players in the dark about the future of fuel pricing and distribution. However, sources within the Federal Ministry of Finance and the Federal Ministry of Petroleum Resources have confirmed that discussions to salvage the naira-for-crude arrangement are ongoing.

The Technical Sub-Committee on the Naira-for-Crude Policy was expected to reconvene on Monday to reassess options. Insiders suggest that the deal may not be permanently abandoned, but NNPC’s extensive forward sales of crude—used as collateral for loans—have left it struggling to meet domestic supply obligations.

Wider Economic Implications

Experts warn that shifting petroleum transactions to a dollar basis could further destabilise Nigeria’s foreign exchange market, placing additional pressure on the already volatile naira. Fuel importers have already suffered losses running into billions of naira following Dangote’s previous price reductions.

Critics argue that the policy shift could also be an attempt to weaken the influence of Dangote Refinery, which has been accused of harbouring monopolistic ambitions. Meanwhile, domestic crude oil refiners insist that halting naira crude sales undermines Nigeria’s efforts to achieve energy security.

The National Publicity Secretary of the Crude Oil Refinery-owners Association of Nigeria, Eche Idoko, said, “Suspending the deal defeats the efforts of all stakeholders in the sector to achieve energy security.”

Larger Struggles for Dangote Refinery

Dangote Refinery’s struggle to secure local crude is not new. When it launched operations last year, its chairman, Aliko Dangote, alleged that international oil companies (IOCs) were deliberately frustrating its operations by refusing to supply crude directly, instead selling through foreign agents at inflated rates.

Despite the intervention of the Nigerian Upstream Petroleum Regulatory Commission, the refinery has continued to face supply bottlenecks. Its executives argue that the failure to enforce domestic crude supply obligations has hampered its ability to stabilise fuel prices.

As the crisis deepens, all eyes remain on the government and the NNPC to resolve the impasse. For now, uncertainty reigns, and the spectre of rising fuel prices looms large over Nigeria’s already struggling economy.

About The Author