Naira Depreciation Spurs Dangote Diesel Price Surge to N1,100 per Litre

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FILE PHOTO: A view of the newly-commissioned Dangote Petroleum refinery is pictured in Ibeju-Lekki, Lagos, Nigeria May 22, 2023. REUTERS/Temilade Adelaja/File Photo

The cost of Automotive Gas Oil, commonly known as diesel, produced by Dangote Petroleum Refinery, has surged from N940 per litre to N1,100 per litre, owing to the devaluation of the naira against the US dollar. This development was revealed on Tuesday.

Recalling The report on April 24, 2024, the Dangote refinery had initially lowered diesel and aviation fuel prices to N940 per litre and N980 per litre, respectively.

In an earlier report on April 17, It was highlighted the refinery’s response to oil marketers’ appeals for a diesel price reduction, resulting in a drop from N1,200 per litre to N1,000 per litre.

However, recent observations on Tuesday disclosed a diesel price increase from the previously announced N940 per litre by the plant in April, now standing at N1,100 per litre. Some dealers procuring lesser volumes reported acquiring the product at N1,200 per litre.

Oil marketers attributed the diesel price hike by the $22bn worth refinery located in Epe, Lagos, to the recent depreciation of the naira against the dollar.

“The refinery had previously slashed diesel prices to about N940 per litre, but it subsequently raised it to N1,100 per litre. This occurred recently, approximately two weeks ago,” stated Abubakar Maigandi, the National President of the Independent Petroleum Marketers Association of Nigeria.

Maigandi attributed this change to the escalating exchange rate, according to information conveyed by the refinery.

Although refinery officials declined to comment on the matter, industry sources and prominent marketers confirmed the price adjustment.

“The recent devaluation of the naira against the dollar is contributing to commodity price increases, and understandably, the cost of diesel from Dangote refinery is affected,” remarked Chief Ukadike Chinedu, the National Public Relations Officer of IPMAN.

Ukadike elaborated that since the refinery imports crude oil, which is dollar-denominated, the recent foreign exchange rate surge is expected to impact refined product prices.

While the naira witnessed marginal improvements against the dollar in March and April, recent weeks have seen it falter, trading above N1,400 per dollar for most of May.

In a Bloomberg report last week, it was disclosed that the Dangote refinery is gearing up to procure millions of barrels of US crude oil over the next year as it scales up processing rates. The refinery issued a term tender for the purchase of two million barrels per month of West Texas Intermediate Midland crude for 12 months, starting in July.

Petrol Price Projections

Meanwhile, oil dealers warmly received recent statements made by Alhaji Aliko Dangote, the President of Dangote Group, regarding the commencement of petrol production at the Dangote refinery for the domestic market.

In a report dated May 18, 2024, Dangote announced that Nigeria would cease petrol imports starting from next month, following the refinery’s outlined plans.

Responding to this development on Tuesday, oil marketers expressed optimism while hoping for a lower petrol price from the refinery compared to the current rates set by the Nigerian National Petroleum Corporation Limited (NNPC).

“It is a positive development if the refinery can commence petrol production by June, as we, the marketers, are prepared to procure the product from the plant,” stated Maigandi.

Regarding discussions on petrol pricing with the refinery, Maigandi explained that while discussions with the plant’s management were ongoing, they had yet to specifically address petrol pricing.

He emphasized the hope for a petrol price from the Dangote refinery to be below the NNPC rate.

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