NNPC halts naira-for-crude deal, impacting Dangote, others

• Published On: 10 March 2025 at 20:30

The Nigerian National Petroleum Company Limited has suspended the naira-for-crude oil swap agreement with domestic refiners, including the Dangote Refinery and other private operators.

BusinessDay reports that this decision, which takes effect immediately, has raised concerns about its potential impact on Nigeria's energy sector and the broader economy.

According to sources familiar with the situation, NNPC has informed local refiners that its crude production is already committed to forward contracts, leaving no supply for domestic refining.

This decision comes despite reports of increased crude output since the agreement's inception, raising concerns that local refiners, including Dangote Refinery, will have to source crude internationally in dollars, resulting in higher costs and fuel prices.

The naira-for-crude arrangement, which went into effect on October 1, 2024, allowed local refiners to purchase crude oil in naira rather than dollars.

It aimed to increase domestic refining, reduce reliance on fuel imports, and strengthen the naira by lowering demand for foreign currency.

The Dangote Refinery, owned by billionaire Aliko Dangote, has benefited significantly from the naira-for-crude agreement, as it relies on local crude for operations.

Analysts warn that the suspension could increase costs and potentially push back the refinery's production timeline.

Other private refiners, such as Waltersmith Petroman and BUA Refinery, are also expected to be affected.

The agreement gave them a low-cost way to secure crude feedstock, allowing them to compete with international refiners.

The decision may jeopardise efforts to achieve self-sufficiency in petroleum production, a major goal of the federal government.