The Federal Government Committee on crude oil sales in Naira is meeting today in Abuja to discuss extending the policy for local refineries. The meeting comes amid increasing challenges between the Nigerian National Petroleum Company Limited and Dangote Refinery over crude supply and financial obligations.
Pressure Mounts on Crude Supply
The Naira-for-Crude policy was introduced to ease foreign exchange pressure and support local refining, but concerns over crude availability have put the arrangement at risk. Dangote Refinery has warned that due to limited crude supply in Naira, it may start selling refined fuel to marketers in dollars.
There were earlier reports that the policy might end this month, but Zacch Adedeji, a member of the committee, has stated that it will continue beyond six months. The committee, chaired by the Minister of Finance, Wale Edun, is expected to review proposals from the Nigerian Upstream Petroleum Regulatory Commission to prevent a collapse of the deal.
NNPCL Struggles With Crude Obligations
One major issue facing the policy is that NNPCL has already committed a large portion of Nigeria’s crude to international creditors through forward-sale agreements. This has made it difficult for the company to meet its obligations to local refiners under the Naira-for-Crude deal.
A government source explained that today’s meeting aims to find a balance between meeting these international obligations and maintaining crude supply to local refineries. The committee will explore possible solutions that ensure both commitments can be fulfilled without disrupting the domestic energy market.
OPEC Quota Poses Another Challenge
Nigeria’s crude production quota under the Organisation of Petroleum Exporting Countries is another challenge in providing crude for local refineries. NNPCL is under pressure to increase crude supply domestically but is wary of exceeding its OPEC limit, which could lead to diplomatic and market consequences.
The government is now faced with the challenge of balancing three key interests ensuring crude supply for local refineries, honouring commitments to international creditors, and maintaining Nigeria’s standing within OPEC.
Industry Uncertainty Over Policy Future
Dangote Refinery’s recent decision to halt the sale of refined products in Naira has raised concerns across the energy sector. The Naira-for-Crude policy has been central to the government’s strategy for stabilising the Naira and improving foreign exchange liquidity.
The Finance Minister has called for urgent talks with key stakeholders, including Zacch Adedeji, who is leading a sub-committee on the fiscal impact of the policy. Analysts warn that failure to resolve the issue could lead to fuel supply disruptions, further weakening of the Naira, and reduced investor confidence in Nigeria’s oil and gas industry.
