Dollarisation of fuel and the burden on Nigerians

July 24, 2026 1:15 am

Gbolade Ighodia

The Dangote Refinery was expected to reduce Nigeria’s dependence on imported fuel and help conserve foreign exchange. Pricing refined products in dollars appears to move in the opposite direction in the short term, although the company argues that it reflects the reality that much of its crude feedstock is still purchased in dollars. For businesses and consumers, the practical implication is that fuel prices may become more volatile whenever the naira weakens against the U.S. dollar.

This new policy from Dangote Refinery brings back to focus the media war fought in 2024 between the company and NNPC. As I said to a few folks after a Sunday service at the time, there’s much that was not being said in the brouhaha, especially from the NNPC side. The Dangote PR machine effectively overwhelmed the NNPC, which stood no chance against the tide of public sentiments owing to its own unfortunate legacy of being an ineffectual, perennially underperforming public corporation that has failed to win the trust and respect of the citizens.

The actual bone of contention was the dollar-naira issue. Can a business be paying its suppliers with naira in a marketplace where every transaction is done in dollars?

The NNPC at the time of the altercation had only about 200,000 barrels of its share of crude left to sell daily. This was because it had committed hundreds of thousands of barrels of crude to leverage Buhari’s government debt. It also had to commit an extra 300,000 barrels to service the $3bn Afrexim loan the Tinubu government took immediately it was sworn in to offset the dollar paucity that caused the trapping of most multinationals’ revenues in Nigeria’s banks.

Crude production level was yet to experience the pick-up that came later the following year, leaving NNPC with no other option but to transfer the crude supply deal it had made with Dangote to its tenants: the international oil companies. The companies put together a dealership in London costing tens of millions of dollars at their own cost to repurchase their crude from their bonded customers to resell to Dangote at the same loading rate. Meaning they were absorbing the ancillary and arbitrage costs to do the bidding of their landlord.

The problem that would lead to the media war was Dangote’s insistence that he be allowed to pay the London dealer in naira after crude had been sold to the refinery at the loading price, with all ancillary costs absorbed by the IOCs. The dealer supplied crude to Dangote Refinery for six months and was not paid because Dangote insisted on paying with Naira still. Eventually, the dealer stopped its supply to the refinery, which led to the media outcry of “Dangote on sabotage.”

As expected, the media and public sentiment raged against the NNPC, which had found itself in a predicament of being between the devil and the blue sea. It had only 200,000 barrels of crude to sell daily and must generate its own foreign exchange, and it had also committed itself to support Dangote Refinery with crude feedstock. It had used its landlord’s advantage to find a crude alternative for Dangote but does not have the leverage to compel the IOC’s dealer to accept Naira for the transaction. After all, NNPC itself does not accept naira for any of its licensing and regulatory transactions with its tenants. How can it then compel them to accept naira payments in an industry that’s dollar-denominated?

What has been known within informed circles but largely concealed from the Nigerian public during the media war has now been brought to light by no lesser a party in the fracas than the Dangote Refinery itself, which now demands that even local dealers must pay in dollars as required by the fundamental metrics of the business.

Here is the question: Who will now mobilise the media and public opinion to compel Dangote Refinery to stay on the side of moderation and caution in this new development? After all, Dangote Refinery expected public opinion to prevail against the fundamental demands of the marketplace at the beginning of the refinery operations. In its media blitzkrieg, it pointed to the domestic economic benefits to citizens that the refinery brings to the table as one of the reasons why it should be allowed to pay naira for crude instead of dollars. This is even though it knew the specific predicament the NNPC was in, and the fact that the crude supplied was from third-party vendors and not NNPC’s.

That no one may ever roll out a media campaign to seek a middle ground in the new policy of the refinery for the benefit of the Nigerian citizens who will be at the receiving end of whatever may be the consequences of the new pricing policy marks the lopsided nature of public sentiments, civic engagement and institutional memory in Nigeria.

Without a doubt, the berthing of Dangote Refinery has been a tremendous boost for the country economically, largely exposing government and its organs like the NNPC as mere eroders of economic value where they’re supposed to be multiplying it. A $20bn bet by a Nigerian businessman has had so many ripple effects on both local and global economic landscapes that it has shown how much inept and visionless leadership in government and our state oil behemoth NNPC has cost the nation over six decades. I remember the comments of former Nigeria’s minister of finance in the 80s and World Bank economist—Kalu Idika Kalu way back then when Dangote announced his intentions to build a refinery in Nigeria.

“The guy is a genius, very revolutionary!” Kalu opined that Dangote was going to hit a major bull’s eye of economic revolution with the plan. This means that informed opinions in Nigeria have always known the kind of economic results this kind of venture will deliver, which further strengthens the case against government and its organs as largely eroding value by their lack of vision and creation of an enabling environment to have long created ventures of this sort.

Again, we must salute the entrepreneurial vision and sagacity of Mr Aliko Dangote in establishing the refinery. But some questions are to be asked.

One, will Dangote be so quick now to dismiss the same ordinary citizens whom he cited at the start of the venture as a major concern for his campaign for naira payment for crude supply?

Can a separate exemption window be made for established and recognised local retailers to pay their own invoices in naira, just like Dangote sought for his refinery way back in 2024?

Should the NNPC not have shed its toga of presumed ineptitude by engaging the refinery in complex negotiations to find a middle ground of moderation to the policy, thereby redeeming its public perception image with the citizens?

One thing is certain, however. Citizens who jumped on the bandwagon of Dangote’s media campaign, oblivious of the other side of the narrative, throwing bricks and stones at the government as the saboteur, must do well not to keep silent now that the tide is turning against them.

Ighodia is a business strategist and consultant at Cranial Resources

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