The Nigerian National Petroleum Company (NNPC) Limited has stopped supplying crude oil to local refineries under the naira-for-crude arrangement.
This move according to reports, could push up petrol prices.
The decision affects refineries, including the Dangote Petroleum Refinery, which will now have to buy crude from international suppliers at higher costs in dollars.
NNPC reportedly informed refineries that all crude supplies had been pre-sold, despite increased production levels.
The naira-for-crude policy, introduced in October 2024, was meant to boost local refining, cut down fuel import costs, and lower petrol prices.
News About Nigeria recalls that President Bola Tinubu directed the Nigerian National Petroleum Company Limited (NNPCL) to sell crude oil to Dangote Refinery and other domestic refineries in naira, aiming to stabilize fuel prices and the dollar-naira exchange rate.
This policy shift was expected to reduce Nigeria’s reliance on foreign exchange for fuel imports, potentially saving the country billions of dollars annually.
However, industry insiders revealed that the programme has been shelved until 2030.
The Dangote refinery, which was meant to receive 385,000 barrels of crude daily under this arrangement, has struggled with supply shortages.
In November 2024, its vice president, Edwin Devakumar, raised concerns about the shortfall, saying that NNPC was delivering far less than agreed.
With Nigeria spending over $4.3 billion in five months to import petrol and diesel, analysts fear the policy change could put more pressure on the economy.
The move could also affect the foreign exchange market and weaken recent gains in the naira’s value.
While NNPC is yet to comment, the Dangote refinery is reportedly reviewing its options in response to the development.
