PIA permits Dangote’s dollar fuel sales – Regulator

The regulator for Nigeria's midstream and downstream petroleum sector has confirmed that the Dangote Petroleum Refinery is not violating the Petroleum Industry Act (PIA) by selling fuel in dollars. Multiple sources within the regulatory agency, speaking anonymously, clarified that the refinery has the right to recover its costs if it purchased crude oil in dollars, a provision supported by the PIA.

Officials explained that the PIA allows operators to earn returns on investments and recover eligible costs. "The naira-for-crude deal is not to Dangote’s advantage right now. They are sourcing a lot offshore. And with the crisis in the Middle East, the refinery has to recover costs now. It has to survive," one source stated, adding that Aliko Dangote has absorbed significant costs but may have reached a breaking point.

“

The naira-for-crude deal is not to Dangote’s advantage right now. They are sourcing a lot offshore. And with the crisis in the Middle East, the refinery has to recover costs now. It has to survive.

Another official elaborated that the PIA permits operators who incur costs in dollars to recover them in the same currency. "If you study the PIA relevant schedules and provisions, when it comes to tariffs, you can recover your costs in dollars if that’s what you’ve spent. So, it’s clear. That is the case. There’s nothing wrong with what the Dangote refinery has done," the official said.

Sources also urged upstream authorities, including the Nigerian National Petroleum Company Limited (NNPC), to address challenges affecting the naira-for-crude arrangement. They noted that the issue lies with crude suppliers not adequately supplying the refinery, forcing it into dominant offshore purchases. This necessitates dollar recovery for costs. The Dangote refinery announced on Monday its transition to quoting ex-depot prices for petrol, diesel, and aviation fuel in dollars for coastal and gantry transactions, invalidating previous Naira-based payment requests.

“

If you study the PIA relevant schedules and provisions, when it comes to tariffs, you can recover your costs in dollars if that’s what you’ve spent. So, it’s clear. That is the case. There’s nothing wrong with what the Dangote refinery has done.