Nigeria’s downstream petroleum sector is bracing for renewed foreign exchange (FX) pressure after Dangote Petroleum Refinery scrapped its naira-denominated pricing model for petrol, diesel and aviation fuel, replacing it with a dollar-based framework that ties domestic fuel prices directly to exchange rate movements.
The change, announced in a notice to marketers and customers dated July 13, 2026, invalidates all previously issued naira Proforma Invoices (PFIs) and deal recaps for gantry and coastal transactions.
Checks showed that marketers will now have to source dollars to purchase products at the refinery gate, effectively reversing the insulation from FX volatility that naira pricing had provided since the arrangement began.
Under the new pricing template, the ex-depot benchmark for Premium Motor Spirit (PMS) is $0.779 per litre, Automotive Gas Oil (diesel) is priced at $1.087 per litre, while Aviation Turbine Kerosene (Jet A1) will sell for $0.942 per litre.
The refinery also fixed the price of coastal petrol deliveries at $1,044.62 per metric tonne. Liquefied Petroleum Gas (LPG) transactions remain excluded from the new framework and will continue under the existing arrangement.
At the official exchange rate of N1,380.50/$, the new PMS benchmark translates to about N1,075.61 per litre.
The refinery, however, stressed that the naira equivalent will no longer be fixed, meaning domestic prices will fluctuate with movements in the foreign exchange market and expose ex-depot prices to exchange rate volatility.
The dollar-pricing regime follows a series of naira-based price reductions by the refinery. On July 2, it cut its ex-depot petrol price by N50 to N1,075 per litre, the fourth reduction within a month. The new dollar benchmark, however, replaces that fixed naira price.
Retail pump prices will continue to reflect transportation, distribution and dealer margins, taxes and other associated costs.
The federal government’s crude-for-naira initiative, launched on October 1, 2024, enabled local refiners to purchase crude oil in naira to support domestic refining and reduce demand for foreign exchange.
Dangote Refinery subsequently adopted naira-denominated sales under the arrangement.
Company executives have consistently maintained that the refinery purchases Nigerian crude at international benchmark prices and remains exposed to global crude prices, freight, insurance and financing costs, all of which determine its operating costs.
With petrol now benchmarked at $0.779 per litre, equivalent to about N1,075.61 at the prevailing official exchange rate, any further depreciation of the naira will feed directly into domestic fuel prices, reopening a channel for imported inflation just as the market had begun to experience relative price stability following four consecutive price cuts before July 2.
Analysts said the development raises fresh concerns over dollar liquidity for petroleum marketers, particularly smaller operators with limited access to foreign exchange.
For consumers, it means petrol prices will become more sensitive to fluctuations in the naira. For policymakers, it also complicates the objectives of the crude-for-naira initiative, whose central aim was to shield domestic fuel pricing from exchange rate shocks.
The development comes even as Dangote Refinery chief executive officer, David Bird, has maintained that the refinery pays international benchmark prices for crude regardless of the naira-for-crude arrangement.
SOURCE: Leadership
