The Nigeria National Petroleum Company (NNPC) Limited has ended the naira-for-crude deal with Dangote Petroleum Refinery and other local refineries.
This move could lead to an increase in petrol prices, as local refineries—including Dangote—will now have to source crude oil from international suppliers, incurring significant costs in dollars.
The NNPC reportedly informed the refineries that it has forward-sold all its crude, despite an increase in production since the deal began.
Nigeria officially introduced the sale of crude oil and refined petroleum products in naira to local refineries on October 1, 2024. The initiative aimed to boost supply, save the country millions in petroleum import costs, and ultimately reduce fuel prices.
However, multiple sources revealed that the program will be suspended until 2030.
A senior source confirmed that the NNPC has notified Dangote Petroleum Refinery and other refiners that it will no longer supply them with crude, having committed all its crude sales until 2030.
Despite efforts to enhance domestic refining, the country has spent “over $4.3 billion importing 6.38 billion litres of premium motor spirit (petrol) and automotive gas oil (diesel) in just five months,” industry sources stated.
The NNPC remains one of the entities importing fuel, supported by the recent deregulation of the downstream sector.
Another source noted that, at a time when Nigerians expect further price reductions, “the NNPC unilaterally decided to end the naira-for-crude initiative.”
Efforts to get comments from the NNPC have been unsuccessful.
While the Dangote refinery has not officially responded, an insider stated that the company would carefully evaluate its options before deciding on the next steps.
Market analysts warn that discontinuing the naira-based crude supply could destabilize the foreign exchange (FX) market, reversing recent gains.
THE TROUBLED CRUDE-FOR-NAIRA DEAL
In October 2024, the federal executive council (FEC) approved the allocation of 450,000 barrels of crude for domestic consumption, to be sold in naira to Nigerian refineries, with Dangote serving as the pilot project.
The NNPC was expected to supply 385,000 barrels per day to the Lekki-based refinery. However, the company has been accused of consistently failing to meet this commitment.
In November 2024, the refinery complained that the program was struggling due to inadequate crude supply.
“We need 650,000 barrels per day, (state oil firm NNPC Ltd) agreed to give a minimum of 385,000 bpd but they are not even delivering that,” said Edwin Devakumar, vice-president of Dangote Industries Limited (DIL).
He further described NNPC’s supply as “peanuts.”
