BREAKING: NNPC Reportedly Withdraws Naira-For-Crude Initiative

According to TheCable, sources indicate that the NNPC has informed refiners that all its crude has been forward-sold, despite an increase in production since the agreement began.

 

The sale of crude oil in naira to Nigerian refineries was officially launched on October 1, 2024, with the aim of boosting domestic supply, reducing import costs, and ultimately lowering fuel prices.

 

However, reports suggest that the initiative has now been put on hold until 2030.

 

A high-ranking industry source confirmed that the NNPC has communicated to Dangote Petroleum Refinery and other local refiners that it will no longer supply them with crude oil due to prior sales commitments extending to 2030.

 

Despite recent efforts to enhance local refining, Nigeria has spent over $4.3 billion importing 6.38 billion litres of petrol and diesel within five months, according to industry insiders.

 

The NNPC remains a key importer of petroleum products, a role justified by the recent deregulation of the downstream sector. However, concerns have emerged over the sudden termination of the naira-for-crude initiative.

 

An industry source noted that “at a time when Nigerians are hoping for further price reductions, the NNPC unilaterally decided to end the naira-for-crude initiative.”

 

While the NNPC has yet to officially respond, Dangote Petroleum Refinery has also refrained from commenting on the matter. However, an official stated that the company is currently evaluating its options before deciding on its next course of action.

 

Analysts warn that discontinuing the naira-based crude supply could destabilize the foreign exchange market and undo recent improvements.

Challenges of the Crude-for-Naira Deal

The naira-for-crude scheme was approved in October 2024 by the Federal Executive Council (FEC), allocating 450,000 barrels of crude for domestic refining.

The initiative was designed to allow Nigerian refineries, particularly Dangote’s, to purchase crude oil in naira rather than dollars.

Under the arrangement, the NNPC was expected to supply 385,000 barrels of crude per day to the Lekki-based refinery. However, the national oil company has faced criticism for failing to meet this commitment.

In November 2024, Dangote Petroleum Refinery raised concerns about the program’s effectiveness, citing 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 Vice-President of Dangote Industries Limited (DIL), Edwin Devakumar

He further described the NNPC’s supply as “peanuts.”