The Nigerian National Petroleum Company (NNPC) Limited has discontinued its naira-for-crude supply deal with Dangote Petroleum Refinery and other local refineries, a move that could lead to an increase in petrol pump prices .
The decision means local refineries will now have to source crude oil from international suppliers, incurring significant costs in US dollars, further straining the country’s foreign exchange reserves.
According to industry insiders, the NNPC informed refineries that it has forward-sold all its crude oil until 2030, despite an increase in Nigeria’s oil production.
The naira-for-crude policy was introduced on October 1, 2024, to enhance local supply, cut down foreign exchange spending on fuel imports, and ultimately bring down petrol prices. However, multiple sources have confirmed that the initiative has been suspended indefinitely until 2030.
Despite efforts to boost domestic refining capacity, Nigeria has reportedly spent over $4.3 billion importing 6.38 billion litres of petrol and diesel in just five months. The NNPC remains one of the key importers of petroleum products, leveraging its role in the recent deregulation of the downstream sector.
Market analysts warn that the NNPC’s unilateral decision to end the naira-based crude supply could destabilize the foreign exchange market, reversing recent economic gains.
While Dangote Refinery has yet to issue an official statement, a source within the company hinted that it is carefully assessing its next course of action.
This development raises fresh concerns about the cost of living in Nigeria, as any increase in petrol prices could further escalate transportation costs and inflation.
