The Federal Government has commenced high-level discussions with Dangote Petroleum Refinery over its recent decision to denominate petroleum product sales in United States dollars, with both parties working towards a framework that could see the refinery resume domestic sales in naira, Petroleumprice.ng has exclusively gathered.
Petroleumprice.ng gathered from senior industry sources familiar with the ongoing discussions that the Nigerian National Petroleum Company Limited (NNPCL), the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) and the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) are jointly engaging the refinery to address concerns arising from the dollar-based pricing regime introduced earlier this week.
According to the sources, the government recognises the operational and financial challenges that compelled Dangote Refinery to adopt dollar-denominated sales and is exploring measures to increase the volume of crude oil supplied to the refinery in naira under mutually acceptable commercial terms.
One of the sources, who spoke on condition of anonymity because of the sensitivity of the discussions, said both sides understand that restoring a stable naira-for-crude arrangement remains the most sustainable solution for Nigeria's domestic fuel market.
"The government understands the full implications of the refinery's dollar pricing policy. Discussions are ongoing with NNPCL, NMDPRA and NUPRC to reach a common ground. The focus is on how Dangote Refinery can receive substantially more crude oil in naira, while the refinery is also open to returning product sales to naira once that framework is firmly in place," the source told Petroleumprice.ng.
The development comes days after Dangote Refinery formally switched the sale of Premium Motor Spirit (PMS), Automotive Gas Oil (AGO) and Aviation Turbine Kerosene (ATK) from naira to United States dollars, citing changes in its crude procurement structure and increasing exposure to foreign exchange risks.
Petroleumprice.ng had earlier reported that the refinery's decision followed growing market instability, increased exposure to exchange rate fluctuations and changes in its crude supply arrangements. According to sources familiar with the refinery's operations, a larger proportion of its crude cargoes is now being procured under dollar-denominated arrangements, while a significant share of refined petroleum products had continued to be sold in naira.
The sources explained that the currency mismatch significantly increased the refinery's foreign exchange exposure, making it increasingly difficult to sustain naira sales while crude purchases were largely settled in dollars. To mitigate that risk, the refinery aligned its product sales currency with its crude procurement obligations.
Under the current pricing structure, industry sources said Dangote Refinery has maintained its official gantry price for Premium Motor Spirit (PMS) at $0.779 per litre, while Automotive Gas Oil (AGO) is priced at $1.087 per litre and Aviation Turbine Kerosene (ATK) at $0.942 per litre. Coastal PMS has also been fixed at $1,044.62 per metric tonne.
Despite the refinery maintaining its official PMS gantry price, Petroleumprice.ng's market intelligence shows that the effective benchmark across the domestic market has now risen to about ₦1,200 per litre, representing an increase of ₦125 per litre above the refinery's earlier equivalent market benchmark. Depot prices monitored across Lagos, Port Harcourt, Warri and Calabar indicate that most marketers have adjusted their ex-depot prices to between ₦1,190 and ₦1,230 per litre, reflecting the broader impact of the dollar pricing policy on the downstream market.
Industry stakeholders believe a successful outcome of the ongoing negotiations could help stabilise Nigeria's petroleum market by reducing foreign exchange pressures on marketers, easing supply chain uncertainties and paving the way for a gradual return to naira-denominated transactions. However, sources cautioned that no final agreement has been reached, with discussions continuing as both the government and the refinery seek a commercially viable arrangement capable of guaranteeing sustainable crude supply while preserving the refinery's operational efficiency.