NNPC Ends Naira-for-Crude Deal with Dangote Refinery, Other Local Producers
The Nigerian National Petroleum Company (NNPC) Limited has discontinued its naira-for-crude arrangement with Dangote Petroleum Refinery and other local refineries, a decision that could increase petrol pump prices nationwide.
Impact on Local Refining and Petrol Prices
The suspension of the naira-based crude supply means local refiners, including Dangote Refinery, will now have to source crude from international suppliers, incurring higher costs in dollars. This development raises concerns over possible hikes in petrol prices and increased volatility in the foreign exchange (FX) market.
Industry sources reveal that despite efforts to boost domestic refining capacity, Nigeria has still spent over $4.3 billion importing 6.38 billion litres of petrol and diesel in just five months.
NNPC Forward-Sells Crude Until 2030
According to high-level sources, NNPC informed local refiners that it has forward-sold all its crude supplies until 2030. This move effectively halts the naira-for-crude policy, which was introduced in October 2024 as a strategy to improve local supply and reduce the cost of petroleum products.
Challenges with the Crude-for-Naira Initiative
The federal executive council (FEC) initially approved the sale of 450,000 barrels of crude in naira for domestic refining, with Dangote Refinery acting as a pilot project. The NNPC was supposed to supply at least 385,000 barrels per day (bpd) to Dangote, but reports indicate it failed to meet this commitment.
In November 2024, Edwin Devakumar, Vice-President of Dangote Industries Limited (DIL), criticized the NNPC’s supply as inconsistent and inadequate, calling it “peanuts” compared to the refinery’s 650,000 bpd requirement.
Uncertain Future for Nigeria’s Fuel Supply
With the NNPC still importing petroleum products, the discontinuation of the naira-based crude supply raises fears of higher fuel prices and increased dependence on foreign markets.
While Dangote Refinery has declined to comment officially, insiders suggest the company is reviewing its options in response to this sudden shift in policy.
Meanwhile, industry analysts warn that the decision could erode recent gains in the forex market and worsen the economic strain on Nigerians.
