New Fuel Prices: Marketers Prepare Ahead As Dangote Stops Sale of Petrol in Naira

• Oil marketers anticipate a new fuel price and have started hoarding petroleum products ahead of changes
• This development has caused many filling stations to close down, while others are barely selling during regular operating hours
• The trend is due to the decision by the Dangote Petroleum Refinery to cease selling products in naira

Legit.ng journalist Dave Ibemere has over a decade of business journalism experience with in-depth knowledge of the Nigerian economy, stocks, and general market trends.

Several fuel stations across Nigeria have shut down or reduced operating hours as oil marketers hoard petroleum products in anticipation of a price adjustment.

The move followed the decision by the Dangote Petroleum Refinery to stop selling petroleum products in naira as the naira-for-crude talks between it and NNPCL appeared to have failed.

The 650,000-barrel-per-day refinery expressed concern over a mismatch between its sales proceeds and crude oil purchase obligations, currently denominated in US dollars.

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The firm announced in a statement:

"Dear valued customers, We wish to inform you that the Dangote Petroleum Refinery has temporarily suspended the sale of petroleum products in naira. This decision is necessary to address the imbalance between our sales proceeds and crude oil purchase obligations, which are currently denominated in U.S. dollars.

To date, our naira-denominated sales have exceeded the value of crude purchased in naira. As a result, we must temporarily adjust our sales currency to align with our crude procurement requirements."

Marketers expect new retail fuel price

Following the Dangote Group's announcement, the cost of loading petrol at private depots in Lagos surged to approximately N900 per litre, up from less than N850 per litre.

The increase sparked concerns about a potential rise in retail prices in the coming days and hoarding of petroleum products.

Chinedu Ukadike, national publicity secretary of the Independent Petroleum Marketers Association of Nigeria (IPMAN), accused depot owners of profiteering, while some filling station operators scrambled to stockpile fuel, Punch reports.

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Ukadike criticised depot owners for profiting from the impasse between the federal government and the Dangote refinery, stating that it was harmful to the economy, Punch reports.

He cautioned marketers against panic buying, warning that the Dangote refinery could slash prices.

Ukadike stated:

"Some depot owners are already raising prices, but we are urging our marketers not to engage in panic buying. If the Dangote refinery resumes operations and reverses the price, it could result in significant losses for them. Depot owners are taking advantage of the situation to profiteer, which is harmful to the economy.

"Similarly, some marketers are stockpiling petrol, anticipating that prices will rise due to the Dangote refinery's suspension of naira sales. They expect to profit from future price hikes, but that may not happen. This issue will be resolved."

He warned all marketers against buying large volumes of petrol to avoid running into debt.

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He advised:

"We, the independent marketers, are advising our members to limit their fuel purchases. Buying large volumes at inflated depot prices could lead to significant capital losses.

"If Dangote lowers prices, those holding high stockpiles of petrol may face serious financial setbacks. Marketers should exercise caution to avoid such risks."

FG schedules meeting on naira-for-crude deal

Earlier, Legit.ng reported that the federal government of Nigeria formed a panel to find a solution to the naira-for-crude agreement impasse.

The panel followed the decision by the Dangote refinery to stop the sale of petroleum products in naira.

The decision by Dangote then led to the increase of petrol prices at private depots across the country.

Proofreading by James Ojo, copy editor at Legit.ng.

Source: Legit.ng