The price of Premium Motor Spirit (PMS) is expected to rise following a decision by the Nigerian National Petroleum Company (NNPC) Limited to discontinue the Naira-for-Crude initiative with Dangote Petroleum Refinery and other local refineries. The initiative, introduced under President Bola Ahmed Tinubu’s administration, will be suspended until 2030, according to multiple sources.
A reliable source confirmed that the NNPC has notified Dangote Petroleum Refinery and other local refiners that it will no longer provide crude oil to them , as it has forward-sold all of its crude supplies until 2030.
The Naira-for-Crude scheme, which allowed local refineries to receive crude oil in exchange for Naira and subsequently sell refined products in Naira to marketers, has faced significant challenges since its introduction in October 2024. These issues have largely stemmed from the NNPC’s failure to meet agreed-upon allocations.
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In October 2024, the Federal Executive Council (FEC) approved the allocation of 450,000 barrels of crude intended for domestic consumption to be sold in Naira to Nigerian refineries, with the Dangote Refinery serving as a pilot project. Under the scheme, NNPC was expected to supply 385,000 barrels per day of crude oil to the $20 billion Lekki-based refinery. However, the NNPC has consistently failed to meet these allocations. For instance, in March, Dangote Refinery received only two cargoes totalling 950,000 barrels (1.9 million barrels for the month), equating to just 61,290 barrels per day – a far cry from the expected 385,000 barrels per day. As a result, the Dangote Refinery has been forced to import crude oil despite selling refined products in Naira to local marketers.
This recent move by the NNPC to unilaterally end the Naira-for-Crude initiative is expected to result in a sharp rise in petrol prices. The Dangote Refinery, which had significantly reduced the price of petrol from over N1,200 to N825 per litre, will now be forced to source all its crude oil in dollars, thereby exerting pressure on the scarce forex.
This shift is also likely to put additional pressure on the Naira, which had seen some stability since Dangote began selling petrol in Naira.
Insiders suggest that the NNPC’s decision may be a deliberate act of sabotage against Dangote Refinery, whose recent efforts to reduce the petrol price from N950 to N825 within just 27 days were widely celebrated by Nigerians but angered many importers, who had lobbied for the refinery to raise its prices.
Despite recent advancements in domestic refining capacity, the country has spent over $4.3 billion importing 6.38 billion litres of Premium Motor Spirit (petrol) and Automotive Gas Oil (diesel) in just five months. The NNPC is among the entities receiving these imported products.
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“The NNPC is not concerned about the relief that Dangote’s price reduction has brought to Nigerians. Their primary concern seems to be the interests of their co-importers, who have reportedly suffered reduction in margins due to the price drop. Is the NNPC serving the people or the oil sector cabal?” questioned a senior oil executive.
Another source added, “At a time when Nigerians were hoping for further price reductions, the NNPC unilaterally decided to end the Naira-for-Crude initiative. Despite the scheme’s shortcomings, Dangote has honoured his commitment to sell to Nigerian marketers, even though he imports a substantial portion of his crude in dollars. This is a shame, and Mele Kyari must be held accountable before he undermines the economy further, as petrol prices affect so many aspects of daily life.”
“How can the NNPC claim it has forward-sold its crude when it has also stated that crude production has increased?” the source continued.
While the Dangote Refinery has declined to comment on the NNPC’s recent move, an official, speaking on the condition of anonymity, said the company will carefully assess its options and decide on the appropriate course of action.
