NNPC Suspends Naira-for-Crude Deal: A Setback for Local Refineries and Fuel Prices

The Nigerian National Petroleum Company (NNPC) Limited has suspended the naira-for-crude oil swap deal with domestic refiners, including Dangote Refinery. This decision, effective immediately, has raised concerns regarding its potential impact on Nigeria’s energy sector and economy.

The naira-for-crude arrangement, initiated on October 1, 2024, allowed local refiners to purchase crude oil using naira instead of dollars, aiming to enhance domestic refining capacity and reduce reliance on imported petroleum products. However, the suspension means that these refiners must now source crude oil internationally, leading to increased operational costs and likely higher fuel prices at the pump.

NNPC has informed local refiners that it has already forward-sold all its crude production until 2030, leaving no supply available for domestic refineries. This situation arises despite reports of increased crude output since the deal’s inception. Analysts express concern that this move could delay Dangote Refinery’s operational timeline and escalate costs for other private refiners like Waltersmith Petroman and BUA Refinery.

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Economists warn that the suspension could exacerbate existing pressures on the naira and hinder Nigeria’s goal of self-sufficiency in petroleum production.