NNPC suspends naira-for-crude deal, fuel price to go up
The Nigerian National Petroleum Company (NNPC) Limited has suspended the naira-for-crude oil swap deal with domestic refiners, including Dangote Refinery and other private operators.
The decision, which took immediate effect, has sparked discussions about its implications for Nigeria’s energy sector and the broader economy.
The naira-for-crude arrangement, introduced on October 1, 2024, allowed local refiners to purchase crude oil in naira instead of dollars.
The initiative was designed to support domestic refining capacity, reduce reliance on imported petroleum products, and stabilize the local currency by easing pressure on foreign exchange reserves.
The termination of the agreement means that Nigerian refineries, including Dangote, will now source crude oil from international suppliers, paying in dollars instead of naira.
This shift is expected to escalate operational costs, potentially leading to higher pump price for fuel.
According to sources familiar with the development, the NNPC informed local refiners that it has already committed its crude oil production to forward contracts, leaving no supply available for domestic refineries.
This was despite official claims that Nigeria’s crude output has increased since the deal first began.
The suspension has, therefore, raised concerns among industry stakeholders, including Dangote Refinery, whose operational timeline may be affected by the new twist.
Analysts fear the suspension could also increase costs, raise inflation and have ripple effects on Nigeria’s economy.
The naira has already faced significant pressure in recent months, and the removal of this dollar-saving mechanism could exacerbate the currency’s volatility, and hinder efforts to achieve self-sufficiency in petroleum production, a key goal of the federal government.
