The Nigeria National Petroleum Company (NNPC) Limited has discontinued the naira-for-crude deal with Dangote Petroleum Refinery and other local refineries, a move that could lead to a potential increase in petrol pump prices.
With the deal scrapped, local refineries will now rely on international suppliers for crude oil, significantly raising costs due to dollar transactions. Industry analysts warn this could trigger volatility in the foreign exchange (FX) market, affecting recent economic stability.
Sources indicate that the NNPC has forwarded all its crude supplies until 2030, despite increased production levels compared to when the naira-for-crude initiative began in October 2024. The policy was initially introduced to reduce fuel import costs, stabilize supply, and lower pump prices, but is now being suspended for the next five years.
This comes at a time when Nigeria has spent over $4.3 billion importing 6.38 billion litres of petrol and diesel in just five months, despite efforts to boost domestic refining capacity.
The Dangote Petroleum Refinery, which was the pilot project for the initiative, has not issued an official statement but is reportedly assessing its options following the abrupt policy shift. Previously, Dangote executives had accused the NNPC of failing to deliver its agreed 385,000 barrels per day (bpd) supply, describing it as “peanuts” compared to the refinery’s 650,000 bpd demand.
Market watchers believe the NNPC’s decision to unilaterally end the naira-for-crude program could further strain domestic fuel prices and increase pressure on foreign exchange reserves. The NNPC has yet to comment on the decision, leaving uncertainties over the future of Nigeria’s fuel supply strategy.