Dangote Begins Indexing Fuel Sales to Dollar in Nigeria

Dangote Petroleum Refinery, owned by Nigerian businessman Aliko Dangote, has started pricing local fuel sales in US dollars. The company cited constraints in crude oil supply as the reason behind this decision. According to Reuters, the refinery, which previously conducted sales in naira, aims to reduce exchange rate risk by indexing to foreign currency. As one of Nigeria's largest private sector investments, the Dangote Refinery has a capacity of 650,000 barrels per day. However, the company states that it cannot operate at full capacity due to inadequate local crude oil supply. This situation has pushed the refinery to turn to imported raw materials and manage costs on a dollar basis. Experts note that this move could increase fuel prices in Nigeria and deepen inflationary pressures. While the Central Bank of Nigeria tries to limit the depreciation of the local currency to preserve foreign exchange reserves, Dangote's dollar demand may create additional pressure in the market. The Dangote Group had previously undertaken the refinery investment with the goal of reducing fuel imports and increasing local production. However, disruptions in crude oil supply are hampering the company's plans. Company officials have stated that negotiations with the government to resolve supply issues are ongoing. This is not investment advice.