A government source who is aware of the operations of the committee in charge of the Naira-for-Crude deal, asking to remain anonymous, informed the Punch newspaper that the giovernment has not ruled out the Naira-for-Crude strategy.
“The initiative is going to continue because it is now obvious that the policy has a great impact on not just fuel prices, but also on other economic indices. It also positively impacted the FX rate,” the source revealed.
“However, the committee is awaiting the Nigeria Upstream Petroleum Regulatory Commission’s submission on the task given to it as regards the policy.
Once that is done, the next thing should be the way forward as regards the Naira-for-Crude policy.”
However, in an interview with S&P Global, a Dangote official voiced serious doubts about the prospects of a renewed Naira-for-Crude agreement.
“We are not even certain if it will be renewed or if it will proceed at all,” he said.
“It’s not commercially advantageous for us. When we buy in naira and sell in naira, the forex risk between the time of buying crude and selling the products may not be fully covered,” he added noting that that Dangote’s activities were being hindered by the agreement’s requirement that it sell its oil products in naira.
The Dangote executive explained that by tying contract pricing to benchmarks based on dollars and transferring them into naira at the point of sale, the refinery was left vulnerable to price swings.
NNPC and the Dangote Refinery
This immediately gave rise to projections that fuel price across the country was set to increase, and as predicted the average price of fuel at the Dangote Refinery has gone from N845 to N930.
This is owing to the fact that oil refiners, chief most of them, the Dangote Refinery has been forced to source crude from external markets.
The NNPC’s halt of the Naira-for-Crude program results from the claim that the group had forward-sold all of its crude, even though production levels were larger now than when the agreement started over six weeks earlier, served as the rationale for the decision.
“Forward-sold all its crude” points out that the Nigerian National Petroleum Company (NNPC) Limited has already sold future petroleum output ahead of schedule, maybe to satisfy contractual commitments, pay off debts, or gain quick cash.
According to the report by the Punch, the first part of the six-month agreement between the NNPC and Dangote Petroleum Refinery ended on March 31, 2025.
Also, it is important to note that the Dangote refinery imported around 140,000 barrels of crude oil every day, for a three-month total of 12.6 million barrels.
