Naira slide pushes Dangote diesel to N1,100/litre

The price of Automotive Gas Oil, popularly called diesel, produced by the Dangote Petroleum Refinery has increased from N940/litre to N1,100/litre due to the crash of the naira against the United States dollar, it was gathered on Tuesday.

Recall that on April 24, 2024, it was reported that the Dangote refinery announced a further reduction in the prices of diesel and aviation fuel to N940/litre and N980/litre respectively.

Earlier, precisely on April 17, it was also reported that the Dangote refinery listened to the calls of oil marketers regarding a reduction in the price of diesel, as the refinery reduced the cost of the commodity from N1,200/litre to N1,000/litre.

In about a week, the multi-billion dollar facility again announced another reduction in the price of AGO but noted at the time that the change was only applicable to dealers purchasing up to five million litres of diesel and above.

However, it was gathered on Tuesday that the cost of diesel from the plant had increased from the N940/litre price that was announced by the plant in April to a new rate of N1,100/litre. Some other dealers who purchased lesser volumes said they got the product at N1,200/litre.

Oil marketers told our correspondent that the hike in diesel price by the $22bn worth refinery located in Epe, Lagos, was due to the recent southward movement of the naira against the dollar.

“The refinery had earlier reduced the price of its diesel to around N940/litre, but it later increased it up to N1,100/litre. This happened recently, maybe about two weeks ago,” the National President, of the Independent Petroleum Marketers Association of Nigeria, Abubakar Maigandi, stated

Providing a reason for this, Maigandi told The Punch that it “is because of the rising exchange rate, according to what the refinery told us.”

Although officials of the refinery stayed mute when contacted on the matter, industry sources and some major marketers confirmed the development.

“The recent crash of the naira against the dollar is pushing up the cost of commodities and, understandably, the price of diesel from Dangote refinery is being affected,” the National Public Relations Officer, IPMAN, Chief Ukadike Chinedu, stated.

He explained that the Dangote refinery imports crude oil, stressing that crude is priced in dollars.

“So the recent rise in the foreign exchange rate is going to have an impact on the prices of refined products from the plant,” Ukadike stated.

In March and April this year, the naira appreciated against the United States dollar, a development that had marginal positive impacts on the cost of commodities.

The Punch, for instance, reported on April 16, 2024, that the naira continued its resurgence against the dollar, appreciating N1,136/$ at the official market and N1,050/$ at the parallel market at the close of trading activities the preceding day.

The report stated that traders predicted the dollar’s fall to below N1,000 before the end of that week.

The improved rate at the time followed a string of foreign exchange directives by the Central Bank of Nigeria aimed at stabilising the naira.

The apex bank in March said it had successfully resolved all valid foreign exchange backlogs, as pledged by the CBN Governor, Olayemi Cardoso, addressing inherited claims amounting to $7bn.

But the improvement in the naira could not be sustained, as the local currency came crashing against the dollar in subsequent weeks.

The naira has traded above N1,400/$ for most of May. For instance, it was reported on May 8, 2024, that operators revealed that they bought the dollar at N1,400 and sold at N1,425 per dollar leaving a profit margin of N25.

This, according to the report, also indicated an N5 drop from the N1,430 it sold the preceding day.

The recent crash of the naira against the dollar warranted a rise in the cost of diesel dispensed by the multi-billion dollar Dangote refinery, according to marketers.

The refinery imports a large portion of its crude and the commodity is priced in dollars.

It was reported last week that the Dangote refinery was seeking to purchase millions of barrels of US crude oil over the next year as it ramps up processing rates.

Bloomberg reported that the plant had issued a term tender for the purchase of two million barrels a month of West Texas Intermediate Midland crude for 12 months starting in July.

“The plant, built by Africa’s richest man, Aliko Dangote, issued a so-called term tender for the purchase of two million barrels a month of West Texas Intermediate Midland crude for 12 months starting in July, according to a document seen by Bloomberg. The tender closes on May 21,” the report stated.

Meanwhile, oil dealers, on Tuesday, welcomed the announcement that was recently made by the President of Dangote Group, Alhaji Aliko Dangote, when he announced that the Dangote refinery would start pumping out Premium Motor Spirit, popularly called petrol, to the domestic market.

It was reported on May 18, 2024, that Dangote explained that following the laid-down plans of the Dangote refinery, Nigeria would no longer need to import petrol starting from next month.

Dangote also stated that his refinery can meet West Africa’s petrol and diesel needs, as well as the continent’s aviation fuel demand.

He spoke at the Africa CEO Forum Annual Summit in Kigali, expressing optimism about transforming Africa’s energy landscape.

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