The suspension of the Federal Government’s naira-for-crude arrangement with the Dangote Petroleum Refinery has sparked fears of an imminent fuel price hike as some filling stations begin stockpiling Premium Motor Spirit (PMS), commonly known as petrol.
Following the Dangote refinery’s announcement last week that it would temporarily halt the sale of petroleum products in naira due to unresolved negotiations with the Nigerian National Petroleum Company Limited (NNPCL), the cost of loading petrol at private depots in Lagos surged to about N900 per litre from less than N850 per litre.
Reacting to the development, the Independent Petroleum Marketers Association of Nigeria (IPMAN) cautioned depot owners against price hikes and urged filling station operators to refrain from panic buying. IPMAN’s National Publicity Secretary, Chinedu Ukadike, stated that depot owners were exploiting the situation for profit, while some marketers were rushing to stockpile petrol in anticipation of higher prices.
“Some depot owners are already increasing the price, but we are asking our marketers not to panic-buy. When the Dangote refinery resumes sales and possibly lowers prices, those who bought at high rates will suffer heavy losses,” Ukadike warned.
He advised independent marketers to limit their purchases to avoid financial losses, emphasizing that Dangote could eventually reduce fuel prices once negotiations with the government are resolved.
Meanwhile, fresh talks between the Federal Government and the Dangote refinery are set to resume today to resolve the naira-for-crude dispute. Sources from the Federal Ministries of Finance and Petroleum Resources confirmed that the Technical Sub-Committee on the Naira-for-Crude Policy would reconvene to explore options for reviving the deal.
An insider disclosed that the transaction was not permanently halted, attributing the current disruption to crude oil availability challenges faced by NNPCL. Reports indicate that NNPCL has committed large volumes of its future crude production as collateral for loans, reducing the supply available for domestic refiners like Dangote.
Oil marketers and industry analysts have warned that the suspension of naira sales by Dangote could increase pressure on the foreign exchange market. With petrol dealers now required to source dollars to purchase products, the naira could face renewed depreciation after recent months of relative stability.
“The naira-for-crude deal allowed Dangote to keep fuel prices lower, forcing NNPCL to follow suit despite its margin concerns. Now that the arrangement is suspended, we might see an increase in petrol prices nationwide,” said Hammed Fashola, National Vice President of IPMAN.
As the first phase of the naira-for-crude deal—initiated in October 2024—nears expiration this month, NNPCL spokesperson Olufemi Soneye confirmed that negotiations are ongoing for a possible renewal. He noted that since the agreement began, 48 million barrels of crude oil had been supplied to the Dangote refinery.
For now, stakeholders and consumers anxiously await the outcome of the negotiations, with the hope that a resolution will prevent further fuel price hikes and economic strain.
