Nigeria: Dangote converts its oil to dollars and puts pressure on the regional market.

The Dangote refinery no longer sets its exit prices in naira but in dollars. The information, reported on July 14 by Reuters, marks a new chapter in the supply difficulties of one of the continent’s largest industrial projects.

According to a spokesperson for the group cited by the agency, the decision results from an imbalance that has become difficult to sustain: the refinery was selling its fuels locally in Nigerian currency while an increasing portion of its crude is purchased at the international price, in dollars.

The Nigerian “naira for crude” system, launched in October 2024, was supposed to allow local refiners to acquire crude in national currency. However, the volumes allocated to Dangote remain below its needs. Reuters indicates that the refinery received seven cargoes in May, while it estimates needing between thirteen and fifteen each month to operate at the expected level.

Prices Now Indexed to the Dollar

The new pricing grid communicated to distributors indicates that gasoline is priced at $0.779 per liter, diesel at $1.087, and aviation fuel at $0.942. These rates will then have to be converted into naira in the distribution chain.

This indexing further exposes the final price of fuel to fluctuations in the exchange rate. It may also increase the foreign currency needs of Nigerian distributors in an economy where the availability of dollars remains a major issue.

For Nigeria, the paradox is striking. The country is one of Africa’s main oil producers and hosts what is presented as the largest refinery on the continent. Yet, Dangote still has to supplement its crude purchases with imports due to insufficient local allocations.

This development should also be monitored in Benin and the sub-region. Price movements and exchange rate tensions in Nigeria can quickly impact regional petroleum product circuits and operators’ expectations. At this stage, no official measures have been announced in Benin in relation to the refinery’s decision.