Refined petroleum products from the $20bn Dangote Petroleum Refinery are to be sold in naira and not in the United States dollar as speculated in some quarters, oil marketers clarified on Monday.

Dealers in the downstream oil sector also stated that the registration process for marketers at the refinery was still ongoing, as many operators had continued to register with the plant.

It was further gathered that officials of the Nigerian Midstream and Downstream Petroleum Regulatory Authority were meeting with the management of the refinery to perfect the pricing template for products produced by the facility.

On January 12, 2023, the Dangote Petroleum Refinery announced the commencement of production of Automotive Gas Oil, also known as diesel, and JetA1 or aviation fuel.

The President, Dangote Group, Aliko Dangote, had in a statement issued by the firm, said, “We have started the production of diesel and aviation fuel, and the products will be in the market within this month once we receive regulatory approvals. This is a big day for Nigeria. We are delighted to have reached this significant milestone.

“This is an important achievement for our country as it demonstrates our ability to develop and deliver large capital projects. This is a game changer for our country, and I am very fulfilled with the actualisation of this project.”

Following that announcement, The PUNCH exclusively reported on January 15, 2023, that seven major oil marketers in Nigeria had registered with the refinery for the lifting and distribution of refined petroleum products produced by the plant.

The seven major marketers include 11 Plc, Conoil Plc, Ardova Plc, MRS Oil Nigeria Plc, OVH Energy Marketing Limited, Total Nigeria Plc and NNPC Retail.

Also as a follow-up, The PUNCH reported again on Monday that the refinery would supply fuel to about 150,000 retail outlets operated by the Independent Petroleum Marketers Association of Nigeria following a meeting between the management of the refinery and executives of IPMAN.

But some Nigerians have expressed concern over the supply of crude to the plant in dollars, and whether this could make the managers of the refinery to sell refined products in dollars, since the plant is located in the free trade zone.

The Dangote Petroleum Refinery and Petrochemical Project, a subsidiary of Dangote Industries Limited, is a 650,000 barrels per day crude oil refinery, located in Dangote Industries Free Zone, Ibeju-Lekki, Lagos, Nigeria.

Responding to the an enquiry on whether the plant would dispense its products in dollars, the National Public Relations Officer, IPMAN, Chief Ukadike Chinedu, admitted that it was true that crude oil, being an international commodity, was sold to the plant in dollars.

He, however, told our correspondent that this would not make the plant to sell refined petroleum products to the Nigerian market in dollars, stressing that other businesses operated in Nigeria by Africa’s richest man were carrying out their transactions in naira.

“The legal tender in Nigeria is the naira. The cement being sold by Dangote Cement is done in naira, not in dollar. The spaghetti and other essential commodities that he is involved in are all sold in naira.

“So why should one think that he will now sell fuel in dollars? Except for the offshore sales for those who want to move the refined products out of Nigeria using vessels to transport them to other countries. Such customers may get theirs in dollar equivalent,” Ukadike stated.

He, however, noted that another important thing was for the Nigerian government to be able to close up the widening gap in the foreign exchange rate.

“If the exchange rate for the dollar is low, petroleum products would have been cheap in Nigeria, because the products are imported. So I believe that Dangote will definitely sell the products in our local currency, which is naira,” he stated.

Asked if marketers had been briefed on whether products would be sold in naira or dollars, considering the fact that crude was supplied to the plant in dollars, Ukadike replied, “No, the pricing template has not come out. What is going on now is legislation. The template is not yet out.

“And I must state that there is no way the NNPC will bring out its template in naira and Dangote will bring out its own in dollars. It is not possible! So for the cost of their products, I think they are still trying to fix the prices with the regulatory agencies of the Federal Government.

“They will also look at the feasibility of the market and other factors, before announcing their prices for diesel and aviation fuel, which are the products they are producing now. So the price is not out, for once it is out, you’ll be informed.”

Ukadike also stated that more oil marketers were registering with the refinery, adding that IPMAN had been at the forefront of the registration process.

“More applications for registration are being sent to the refinery by marketers and I think the process has been ongoing for some time now. It is a good thing for the country to have a refinery that refines its crude domestically,” the IPMAN official stated.

Another major marketer confirmed that the pricing template for refined products from the facility has not been released yet, but noted that there had been a series of meetings with the regulators on this.

Asked whether the pricing template for refined products had been released, the dealer, who pleaded not to be named due to lack of authorisation, replied, “No, not yet. We have not received any template yet, not to my knowledge.

“But it is possible that the template should be out soon because various meetings by officials of the refinery with dealers and regulators have been ongoing lately. The meetings are to give insights about activities at the plant. And I believe the template is going to be in naira.”

The Dangote Petroleum Refinery is an industrial plant that transforms crude oil into various usable petroleum products such as diesel, gasoline, jet fuel and kerosene.

Dangote Petroleum Refinery with a capacity to refine 650,000 barrels of crude oil per day covers an area of approximately 2,635 hectares in the Lekki Free Trade Zone in Lagos.

The refinery has so far received six million barrels of crude oil at its two SPMs located 25km from the shore. The first crude delivery was done on December 12, 2023, and the 6th cargo was delivered on January 8, 2024.

The refinery can load 2,900 trucks a day at its truck-loading gantries. The products from the refinery will conform to Euro V specifications, according to the firm.

“The refinery design complies with the World Bank, US EPA, European emission norms, and Department of Petroleum Resources emission/effluent norms, employing state-of-the-art technology,” the company had stated in statement.

https://www.google.com/amp/s/punchng.com/marketers-will-pay-naira-for-dangote-fuel-says-ipman/%3famp

For those that understand economics more, is this good or bad for our naira?

Magnetic010:
For those that understand economics more, is this good or bad for our naira?

Good for naira. Recall that fuel importation requires forex (USD, Euro, etc.) to purchase

Atleast some pressure will be off the local currency

Magnetic010:
For those that understand economics more, is this good or bad for our naira?

Atleast the little I know is that we won't now have to pay USD for that volume of Petroleum products we would have imported. Now ordinarily price of these products are supposed to be lesser now because duty and other importation costs won't be paid

Magnetic010:
For those that understand economics more, is this good or bad for our naira?

It's good for the naira.

He will only sell in dollar when he export

Nigeria won't need to spend over $10 billion importing refined crude again. It will have a positive effect on the naira on the short, medium and long run

Paraman:
Nigeria won't need to spend over $10 billion importing refined crude again. It will have a positive effect on the naira on the short, medium and long run

That's not how it works.
Some forex will be saved but nothing close to $10 billion.

ivolt:

That's not how it works.
Some forex will be saved but nothing close to $10 billion.

Nigeria spent over $10 billion importing refined crude last year, If the Dangote refinery can take care of Nigeria needs, are you telling me will still be dashing out over $10 billion dollars to foreign refiners?

In 2022, we spent about $21 billion importing oil

Please explain, I want to learn.

Dynamicboss:


Good for naira. Recall that fuel importation requires forex (USD, Euro, etc.) to purchase

Atleast some pressure will be off the local currency

There is nothing good about the report because if you read the entire story you would realise the marketers are also not sure yet the currency it would be sold in.

When will Dangote fuel hit the market

Paraman:
Nigeria spent over $10 billion importing refined crude last year, If the Dangote refinery can take care of Nigeria needs, are you telling me will still be dashing out over $10 billion dollars to foreign refiners?

Please explain, I want to learn.

First, Nigeria does not dash out any money.
It buys goods it needs at international price.

The government get its forex primarily from oil export.
If Dangote refinery sells in Naira, it means it will pay for the crude it buys
from the NNPC in Naira too.
So, the government will be getting less forex than it used to unless it strictly
sells to Dangote from increased crude production.
Of course, some forex will be saved in the process due to the extra value created
and also shipping costs assuming Dangote can produce at a competitive rate.

This only applies to local market, whatever Dangote export is a positive for the government.

Magnetic010:
For those that understand economics more, is this good or bad for our naira?

Good for naira. This would help reduce the pressure on the demand for US dollars.

From my analysis, if Fg actually want to crush the dollar, it will done in no time, but because of some evil politicians dollar still remain higly esteemed. The fact is, we know solution to our problems.

Crude sold to Dangote is additional sales to Nigeria. It was never part of what was sold previously, it is a new additional market that should lead to more sales.

Nigeria as more than enough crude to sell to Dangote n at the international market where it will earn forex in dollars.

Domestic sales purchase btw Dangote n NNPC is additional profit to the country n those in charge should ensure the increment is accounted for with substantial earning in the range of the $10 billion we spent importing the same substance else those at the helm have been doing round tripping to the tune of whatever is less of $10 billion.

That is another focus of fraud if Nigeria can account or save ₦10 bullion we spend buying finished product yearly previously before Dangote refinery.

Note Dangote will also be selling refined product to surrounding countries as it will be cheaper than importing from USA or Europe like they use to.

ivolt:

First, Nigeria does not dash out any money.
It buys goods it needs at international price.

The government get its forex primarily from oil export.
If Dangote refinery sells in Naira, it means it will pay for the crude it buys
from the NNPC in Naira too.
So, the government will be getting less forex than it used to unless it strictly
sells to Dangote from increased crude production which is not happening anytime soon.
Of course, some forex will be saved in the process due to the extra value created
and also shipping costs assuming Dangote can produce at a competitive rate.

This only applies to local market, whatever Dangote export is a positive for the government.

ivolt:

First, Nigeria does not dash out any money.
It buys goods it needs at international price.

The government get its forex primarily from oil export.
If Dangote refinery sells in Naira, it means it will pay for the crude it buys
from the NNPC in Naira too.
So, the government will be getting less forex than it used to unless it strictly
sells to Dangote from increased crude production which is not happening anytime soon.
Of course, some forex will be saved in the process due to the extra value created
and also shipping costs assuming Dangote can produce at a competitive rate.

This only applies to local market, whatever Dangote export is a positive for the government.

My question to you is which imported product is taking almost our forex in the last 5-8 years?

You think the govt really wants to ease the pressure on the naira?

Dynamicboss:


Good for naira. Recall that fuel importation requires forex (USD, Euro, etc.) to purchase

Atleast some pressure will be off the local currency

It should but may not. The dollar might be used to import something else like more frivolities for politicians

Paraman:
Nigeria won't need to spend over $10 billion importing refined crude again. It will have a positive effect on the naira on the short, medium and long run

Another bad news for HATERS.

DMerciful:
It should but may not. The dollar might be used to import something else like more frivolities for politicians

It will have a positive effect on the naira. There will be enough dollars for them to buy the frivolities

Magnetic010:
For those that understand economics more, is this good or bad for our naira?

very good for the naira

ivolt:

First, Nigeria does not dash out any money.
It buys goods it needs at international price.

The government get its forex primarily from oil export.
If Dangote refinery sells in Naira, it means it will pay for the crude it buys
from the NNPC in Naira too.
So, the government will be getting less forex than it used to unless it strictly
sells to Dangote from increased crude production which is not happening anytime soon.
Of course, some forex will be saved in the process due to the extra value created
and also shipping costs assuming Dangote can produce at a competitive rate.

This only applies to local market, whatever Dangote export is a positive for the government.

Exporting to majority of west African countries is the deal here for dangote.

The more things change, the more they remain the same

Paraman:
It will have a positive effect on the naira. There will be enough dollars for them to buy the frivolities

seanfer:


My question to you is which imported product is taking almost our forex in the last 5-8 years?

The question is irrelevant.
It is just like asking which food is taking a large part of a salary.
Whether you switch from beans to rice makes little impact.
What matters is if you decide to start fasting to save money or get a new job with increased salary.

Economics looks simple but some aspect are counterintuitive.

They were also paying Naira to the depot's before so what changed and besides Dangote is buying crude in dollars so nothing has changed a out our FX reality

Well, Dangote will sell in Naira, and take the Naira to the importer-exporter FX market to buy USD to purchase crude oil from Nigeria or elsewhere. Pending when he will start exporting to warn its own FX.

Or he will be paying in Naira to fulfill the Naira needs of the suppliers. Irrespective, it will be a relief to the Naira. Imagine 16m daily diesel consumption, 50m PMS daily consumption, that will free up over $60m daily.

Magnetic010:
For those that understand economics more, is this good or bad for our naira?

It means there will be no need for usd forex used to import refined crude, a threat to USD dominance. The consequences are enormous for Nigeria.

Blinken is in Nigeria let's hope it gets sorted.

I have read most comments on this thread and I have to be honest,the discussion is very robust,no insults just plain economics,this is how decent discussions should be,you leave the thread more informed and educated
I strongly believe that based on this news alone,the naira might have a strong rally
There was this apprehension that Dangote might charge in dollars for some products but this is a very good move
The second checkmate that will sustain the rally o the naira is if the Nigerian government and Dangote can work out a payment system for his crude oil that will not put further strain on the Naira
If the two measures are put in place,it will release a lot of pressure on the demand of Dollars
I repeat,those hoarding dollars will soon drink garri with their dollars,it is not a prophecy it is simple economic reality
Once you cut off the head of the snake(buying and selling of Refined products in foreign currency),the body will have a calm sleep

Godoverevery:
Another bad news for HATERS.

Another blanket statement caused by ignorance...
If you don't understand the economics, why not shut it instead of chatting shit

I told ya.. Nice one

Paraman:
Nigeria spent over $10 billion importing refined crude last year, If the Dangote refinery can take care of Nigeria needs, are you telling me will still be dashing out over $10 billion dollars to foreign refiners?

In 2022, we spent about $21 billion importing oil

Please explain, I want to learn.

I concur.