The Nigerian National Petroleum Company Limited (NNPCL) remains committed to its forward sales agreements, even as uncertainty clouds the fate of the naira for crude deal with Dangote Refinery. This six-month agreement, which commenced in October 2024, expires today, 31st March 2025, with no clear indication of an extension as discussions remain at a standstill.
Rising Petrol Prices Amidst Uncertainty
The stalled negotiations have already begun impacting petrol prices across the country. Within a week, pump prices have surged from ₦860 per litre to over ₦930 per litre, as oil marketers point to the absence of a renewed naira-for-crude agreement as a key driver of this increase.
Industry players warn that should the deadlock persist, petrol could soon sell for ₦1,000 per litre. Further complicating matters, Dangote Refinery capable of refining 650,000 barrels of crude per day has announced a 30 day maintenance shutdown of its petrol production unit in June, raising additional concerns about supply stability.
Stalled Talks and Strategic Constraints
A senior finance ministry official revealed that no recent meetings have taken place, with discussions expected to resume post-holiday. The naira-for-crude arrangement was originally designed to enhance domestic fuel supply, curb import costs, and stabilise pump prices. Under this scheme, Dangote Refinery has received 48 million barrels of crude oil in naira since October 2024, with an overall supply of 84 million barrels since it began operations in 2023.
However, on 19th March 2025, Dangote Refinery announced a temporary halt to selling petrol in naira, citing financial losses due to purchasing crude in US dollars while receiving payments in local currency. This shift has significantly altered market dynamics.
Impact on Fuel Distribution and Costs
The refinery’s move has had immediate ripple effects. The cost of loading petrol at private depots in Lagos has climbed to ₦900 per litre, up from less than ₦850. Consequently, pump prices vary across the country, with Lagos stations selling at ₦930, Abuja at ₦950, and northern states experiencing prices as high as ₦960 per litre.
Analysts attribute the deal’s stagnation to NNPCL’s forward crude sales strategy, which has seen much of Nigeria’s future crude production committed to repaying international loans. This has left limited crude oil available for local refining, straining domestic supply and pushing up costs.
Marketers Count Their Losses, Call for Urgent Action
Fuel marketers report a cumulative loss exceeding ₦200 billion over the past six months due to price instability, making it increasingly difficult to sustain operations. Many are now urging the federal government to address the crisis swiftly.
Hammed Fashola, Vice President of the Independent Petroleum Marketers Association of Nigeria (IPMAN), described the naira-for-crude deal as a stabilising mechanism, advocating for a flexible approach to ensure continuity. IPMAN has called for an emergency stakeholders’ meeting to discuss possible resolutions, but the meeting has been pushed to 1st May 2025 due to the ongoing holiday season.
For now, Nigerians are bracing for further price hikes, as fuel costs continue to drive up transport fares and inflationary pressures mount. With negotiations stalled and forward sales locking up crude oil allocations, the prospect of a lasting solution remains uncertain.
