There is growing concern in Nigeria’s oil and gas sector as the Federal Government remains undecided on the future of the naira-for-crude agreement between the Nigerian National Petroleum Corporation Limited (NNPCL) and Dangote Petroleum Refinery.
The six-month deal, which began in October 2024, officially ends today, March 31, 2025. However, there has been no final decision on whether the deal will be extended or terminated.
Sources close to the negotiations have revealed that progress has been minimal, and the lack of resolution is already affecting fuel prices. In the past week, the cost of petrol has surged from about N860 per litre to over N930 per litre.
Industry players blame the price hike on the Federal Government’s failure to renew the naira-for-crude deal, which had previously helped stabilize petrol prices.
Experts warn that if the deadlock persists, petrol prices could climb to N1,000 per litre in the coming weeks.
Adding to the uncertainty, the Dangote Refinery, with a production capacity of 650,000 barrels per day, is set to shut down its petrol production unit for maintenance in June, a move expected to last around 30 days and further strain fuel supply.
A source from the finance ministry disclosed that talks between the parties involved have made little headway, with no meetings held last week. “Nothing new has happened. The committee is expected to meet after the holidays,” the source said.
The naira-for-crude deal, initiated on October 1, 2024, was designed to boost domestic fuel supply, reduce dependence on expensive imported petroleum products, and lower fuel prices.
The NNPC confirmed that Dangote Refinery received 48 million barrels of crude oil priced in naira as part of the agreement.
However, on March 19, the Dangote Refinery temporarily halted the sale of petrol in naira, citing a mismatch between its crude oil purchase obligations, which are in US dollars, and its sales proceeds in naira.
This announcement led to an immediate spike in petrol prices at private depots, with costs rising to approximately N900 per litre in Lagos.
Industry insiders suggest that the deal’s collapse stemmed from NNPC’s use of yet-to-be-produced crude to secure loans, leaving the company with insufficient crude to meet domestic supply needs.
As a result, retail prices have surged across the country, reaching N930 per litre in Lagos, N950 in Abuja, and N960 in the northern regions.
Chinedu Ukadike, National Publicity Secretary of the Independent Petroleum Marketers Association of Nigeria (IPMAN), expressed concern over the rising petrol prices, attributing the increases to the ongoing uncertainty around the naira-for-crude deal.
He stressed the need for a swift resolution and announced a stakeholders’ meeting on May 1, 2025, to discuss the issue.
Marketers have reported over N200 billion in losses due to fluctuating petrol prices over the past six months, leading to a decline in bulk purchases.
Hammed Fashola, IPMAN’s Vice President, warned that if the naira-for-crude deal is not revisited, petrol prices could soon reach N1,000 per litre. He called on the government to renew the deal with Dangote Refinery, emphasizing that it had played a crucial role in stabilizing fuel prices.
The ongoing price hikes have also resulted in higher transport fares, further driving up the cost of living for many Nigerians.
Fashola expressed disappointment over the reluctance of depot owners to justify their price increases, urging them to consider the financial impact on citizens. He added that while price fluctuations are inevitable, the naira-for-crude arrangement had the potential to stabilize the market.
“As we continue to navigate this situation, it’s crucial for the government to revisit the deal and take action to protect the interests of the Nigerian people,” he said.
With the future of fuel prices uncertain, Nigerians are left to brace for potential price hikes in the weeks ahead.
