The Nigerian National Petroleum Company Limited’s (NNPCL) substantial allocation of crude oil to foreign creditors has led to a significant challenge in supplying the commodity to domestic refineries, including the Dangote Petroleum Refinery.
Sources familiar with the matter revealed that NNPCL allocated large amounts of crude to settle loans, which complicates the continuation of the naira-for-crude arrangement between NNPCL and Dangote.
Sources from the Federal Ministry of Finance and the Ministry of Petroleum Resources confirmed that the Technical Sub-Committee on the Naira-for-Crude Policy will reconvene on Monday to address the issue.
The committee has directed the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) to propose alternative options for consideration.
Meanwhile, oil marketers have expressed their intentions to explore alternative options due to Dangote refinery’s suspension of naira-denominated sales of petroleum products.
Dangote’s refinery had announced on Wednesday that it temporarily halted the sale of products in naira, citing an imbalance between sales proceeds and crude oil purchase obligations, which are priced in US dollars.
Despite this, an insider involved with the naira-for-crude negotiations emphasized that the suspension is not expected to be permanent.
The key challenge, according to the source, is the availability of crude, as NNPCL has already sold substantial volumes.
Following Dangote’s announcement, petrol prices at private depots in Lagos surged to approximately N900 per litre, a significant jump from the previous N850 per litre.
Petroleum products marketers are preparing for potential disruptions in the market and are looking to diversify their sources, including exploring options with NNPC and other local refineries such as Azikel Refinery in Bayelsa, which is upgrading its capacity.
The NNPC, however, has not confirmed or denied Dangote’s claims regarding dollar-denominated crude purchases. Spokesperson Olufemi Soneye reiterated that NNPC remains committed to supplying crude to local refineries under mutually agreed terms.
Industry leaders are urging the Federal Government to preserve the naira-for-crude arrangement, which has contributed to the stability of petroleum prices in the country.
