Africa’s largest oil refinery has moved to price its products in Nigeria in US dollars, which could increase inflationary pressures ahead of presidential elections in January.
The Dangote Refinery in Lagos agreed in 2024 to set depot prices in the local currency following a government deal that involved sourcing crude oil domestically, which the plant would purchase in naira. But the company continues to buy foreign crude in dollars for a significant portion of its feedstock. With the refinery planning an initial public offering later this year, the move to dollar pricing for local sales aims to shield it from foreign exchange risks.
The 650,000 barrels-a-day Dangote plant produces enough fuel for domestic consumption in Nigeria, Africa’s most populous nation, and is the most influential determinant of pump prices. Its move to sell in dollars could increase local demand for the US currency, weakening the naira and driving up inflation, which has risen in recent months. A cost of living crisis, driven by higher fuel prices since the removal of a fuel subsidy by President Bola Tinubu in 2023, is the top issue for voters heading into January’s election.
