NNPC Reportedly Halts Naira-for-Crude Deal, Raising Fuel Price Hike Concerns

NNPC Reportedly Halts Naira-for-Crude Deal, Raising Fuel Price Hike Concerns

The Nigerian National Petroleum Company (NNPC) Limited has halted the naira-for-crude deal with Dangote Petroleum Refinery and other local refineries.

This move could drive up petrol prices, as these refineries must now source crude from international suppliers at higher dollar costs.

NNPC reportedly informed refineries that it has forward-sold all its crude, despite increased production. The naira-for-crude initiative, launched on October 1, 2024, aimed to boost supply, cut import costs, and lower pump prices. However, sources say the policy is suspended until 2030.

Despite efforts to strengthen domestic refining, Nigeria spent over $4.3 billion importing 6.38 billion liters of petrol and diesel in five months. NNPC remains a key importer, following recent downstream sector deregulation.

The decision has sparked concerns about foreign exchange volatility. Market analysts warn it could reverse recent currency gains. Dangote Refinery, which was to receive 385,000 barrels per day under the scheme, has struggled with inadequate supply. In November 2024, Dangote’s VP, Edwin Devakumar, criticized NNPC’s delivery as “peanuts.”

The federal executive council (FEC) had approved selling 450,000 barrels of crude in naira to local refineries, with Dangote as the pilot. However, NNPC has been accused of failing to meet commitments, leading to uncertainty over the initiative’s future.