NNPC Ends Naira-For-Crude Deal With Dangote, Other Local Refineries, Sparking Fears Of Petrol Price Hike

This development may lead to an increase in the pump price of petrol, as local refineries, including Dangote, will now have to rely on international suppliers for crude feedstock, incurring higher costs in dollars.

The NNPC reportedly informed the refineries that all its crude has been forward-sold, despite production levels now being higher than when the deal commenced.

Nigeria officially launched the sale of crude oil and refined petroleum products in naira to local refineries on October 1, 2024. The initiative was aimed at improving domestic supply, saving the country millions of dollars in petroleum product imports, and ultimately lowering pump prices.

However, multiple sources indicated that the initiative will be suspended until 2030.

A high-level source confirmed that the NNPC has notified Dangote Petroleum Refinery and other local refiners that crude oil supply will no longer be provided, as the national oil company has committed its crude resources in forward sales until 2030.

Despite efforts to bolster domestic refining, Nigeria has spent over $4.3 billion importing 6.38 billion litres of premium motor spirit (petrol) and automotive gas oil (diesel) within just five months, according to industry sources.

The NNPC remains one of the key importers of petroleum products, a practice backed by the recent deregulation of the downstream sector.

“At a time when Nigerians are expecting further reductions in fuel prices, the NNPC unilaterally decided to end the naira-for-crude initiative,” another source disclosed.

TheCable has reached out to the NNPC for an official statement on the matter.

While the Dangote refinery has yet to comment on the NNPC’s decision, an official stated that the company is carefully assessing its options before determining its next course of action.

Market analysts warn that stopping the naira-based crude supply might destabilize the foreign exchange (FX) market and reverse recent gains.

In October 2024, the Federal Executive Council (FEC) had approved the allocation of 450,000 barrels of crude for domestic consumption to be sold in naira to Nigerian refineries, with the Dangote refinery as a pilot project. Under the scheme, the NNPC was to supply 385,000 barrels per day (bpd) of crude to the Lekki-based refinery.

However, the NNPC has been accused of consistently failing to meet this allocation.

In November 2024, the Dangote refinery raised concerns over inadequate crude supply under the naira-for-crude initiative.

“We need 650,000 barrels per day, and NNPC Ltd agreed to supply 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 the NNPC’s supply as “peanuts.”