With one voice, marketers under different umbrellas of Petroleum products marketers yesterday cried out over the Dangote Petroleum Refinery introduction of sale of products in dollars.

Speaking with The Nation, the Independent Petroleum Marketers Association of Nigeria (IPMAN), National President, Alhaji Abubakar Maigandi predicted that the marketers will have issues sourcing the dollars.

“In fact, that domination in dollars, it will become difficult for independent petroleum marketers because for them to source dollars is a very difficult situation as we are using Naira in Nigeria.”

The IPMAN boss urged the management of Dangote Refinery to exempt the independent marketers from the payment of dollars for petrol because their customers buy the products in Naira, which is Nigeria’s official and domestic currency.

“But we are asking him to allow independent marketers to be buying it in Naira since in our filling stations we pay by Nigeria’s currency,” he said .

Similarly, the Natural Oil and Gas Suppliers Association of Nigeria (NOGASA) National Public Relations Officer, Chief Chinedu Ukadike, predicted that the refinery’s sale strategy will culminate in the increase in pump prices.

The spokesperson said, “I have not seen the policy statement, but if eventually there is something like that, it will definitely reverse us to another increase in pump prices of petroleum products because now we will be facing two things: the cost of exchange rate and price of crude oil.

“Ironically, it will drive pump prices up, which is not good for the economy because we are trying to manage our meagre funds to buy petroleum products.”

Meanwhile, the Petroleum Retail Outlets Owners Association of Nigeria (PETROAN) President, Dr. Billy Harry described buying from the Dangote’s Refinery as importation of products.

Although he admitted that as the owner of the business, Dangote has the right to fix the prices, he said the marketers will shop for dollar to buy the product.

Ukadike said, “Our reaction is that it is his business. “

Dr. Muda Yusuf, in an exclusive interview with The Nation, said more than 70 per cent of the refinery’s crude oil feedstock is imported, and purchased in US dollars, it translates that foreign exchange is the refinery’s dominant cost component. He explained that even the crude sourced domestically is priced at the Naira equivalent of prevailing international crude oil prices. Consequently, he argued, local crude confers little pricing advantage because its value remains fully indexed to global oil prices and the exchange rate.

According to him, the refinery’s decision reflects commercial realities, not market failure. Any refinery whose principal input is purchased in foreign currency, he further said, will naturally seek to align its revenue with its cost structure.

“Against this backdrop, selling refined products solely in Naira creates a significant currency mismatch. The refinery incurs most of its production costs in foreign currency while earning revenue in local currency, exposing it to substantial exchange-rate risk.”

“ For any capital-intensive business, such a mismatch is commercially unsustainable. Aligning the currency of revenue with the currency of costs is therefore a rational risk-management decision,” Yusuf argued.

According to him, the new arrangement of purchasing PMS from the Dangote Refinery is unlikely to require exclusive settlement in US dollars. He reasoned that marketers or purchasers may still have the option of paying either in dollars or in the Naira equivalent of the prevailing dollar price. This, he further contended, would be consistent with pricing practices in sectors such as aviation, where services are denominated in foreign currency but settled in Naira at the prevailing exchange rate. He added that provided the foreign exchange market remains sufficiently liquid, marketers should be able to access the required foreign exchange through the banking system.

DR. Yusuf, who is also an economist, however noted that the real issue extends beyond the refinery’s pricing policy, but rather the country’s inability to supply sufficient crude oil to domestic refineries.

“That is the fundamental policy challenge. If the refinery were able to source most of its crude domestically under a sustainable Naira-denominated supply arrangement, its exposure to foreign exchange risk would decline significantly. Instead, its dependence on imported crude has effectively dollarised its cost structure, making some form of exchange-rate pass-through almost inevitable,” Dr. Yusuf said.

Under this circumstance, he warned, the implication is that domestic petroleum prices will increasingly respond to two variables: movements in the exchange rate and fluctuations in international crude oil prices. A weaker Naira or higher crude prices, he argued, will translate more quickly into higher domestic fuel prices.

“Current geopolitical developments reinforce this concern. Renewed hostilities involving the United States and Iran have pushed crude oil prices back towards $84 per barrel, reversing much of the price relief witnessed in recent weeks. If these tensions persist, higher international oil prices could compound domestic pricing pressures,” he warned.

Still, the CPPE boss noted, there are also broader macroeconomic implications.

“Heavy reliance on imported crude will increase demand for foreign exchange to finance feedstock imports, potentially adding pressure to Nigeria’s foreign exchange market. One of the anticipated benefits of domestic refining was the conservation of foreign exchange through local crude supply. That benefit has been significantly diluted because the refinery continues to import a substantial proportion of its crude requirements,” he said.

Yusuf advised that the policy response in this instance should therefore focus on addressing the underlying structural constraints rather than the pricing decision itself

He proffers: “The enduring solution lies in increasing domestic crude availability, deepening foreign exchange stability and reducing Nigeria’s dependence on imported feedstock. Only then can the full economic benefits of domestic refining be realised.

“The first priority is to ensure adequate allocation of Nigerian crude to domestic refineries under a commercially sustainable Naira-denominated framework. This would materially reduce foreign exchange exposure, lower exchange-rate pass-through to fuel prices and strengthen Nigeria’s energy security.

“The second priority is to sustain exchange-rate stability. A stable—or preferably appreciating—Naira would reduce the cost of imported crude and moderate domestic fuel prices. Lower international crude oil prices would reinforce these gains,” Dr. Yusuf said. (The Nation)

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