The Nigerian National Petroleum Company (NNPC) Limited has discontinued its naira-for-crude arrangement with Dangote Petroleum Refinery and other local refiners, according to a report by sources.
This decision is expected to push petrol prices higher, as local refineries—including Dangote’s—will now have to source crude oil from international markets, incurring significant costs in dollars.
Sources indicate that the NNPC has informed local refineries that it has forward-sold all its crude oil, despite an increase in national production levels since the deal began. Nigeria initially launched the naira-based crude oil sale on October 1, 2024, aiming to enhance local supply, cut down petroleum import costs, and stabilize fuel prices. However, multiple reports suggest the initiative has been suspended until 2030.
A senior industry source confirmed that NNPC has officially notified Dangote Refinery and others that crude oil will no longer be supplied under the naira-for-crude scheme, as the company has already committed its crude production to long-term contracts.
Despite efforts to expand domestic refining capacity, Nigeria has reportedly spent over $4.3 billion importing 6.38 billion liters of petrol and diesel within five months. NNPC remains a key importer of petroleum products, a move backed by the recent deregulation of the downstream sector.
A market analyst warned that halting the naira-for-crude arrangement could create volatility in the foreign exchange market, potentially reversing recent currency gains. The decision also comes at a time when Nigerians were expecting further reductions in fuel prices.
In October 2024, the Federal Executive Council (FEC) approved the allocation of 450,000 barrels of crude for domestic refineries to be sold in naira, with Dangote Refinery serving as the pilot project. Under this agreement, NNPC was supposed to supply 385,000 barrels per day to the Lekki-based refinery. However, reports suggest the company consistently failed to meet this obligation.
In November 2024, Dangote Refinery publicly expressed concerns over the scheme’s effectiveness, stating that it was still unable to secure sufficient crude oil supplies. “We need 650,000 barrels per day. NNPC agreed to provide at least 385,000 bpd, but they are not even delivering that,” Edwin Devakumar, Vice-President of Dangote Industries Limited, had said, describing NNPC’s supply as “peanuts.”
While Dangote Refinery has not issued an official statement on NNPC’s latest decision, a company representative confirmed that management is evaluating its next steps.
