The Nigerian National Petroleum Company (NNPC) Limited has halted its naira-for-crude oil swap agreement with domestic refiners, including the Dangote Refinery and other private operators. The decision, which took immediate effect, has ignited debates over its potential impact on Nigeria’s energy sector and the wider economy.
Introduced on 1st October 2024, the naira-for-crude arrangement enabled local refiners to buy crude oil in naira rather than US dollars. The policy aimed to bolster domestic refining capacity, lessen dependence on imported petroleum products, and stabilise the local currency by alleviating pressure on foreign exchange reserves.
With the termination of the deal, Nigerian refineries, including the highly anticipated Dangote facility, will now need to procure crude oil from international suppliers, paying in dollars instead of naira. This change is anticipated to drive up operational costs, potentially resulting in higher fuel prices for consumers.
Sources close to the matter revealed that the NNPC informed domestic refiners that its crude oil production has already been allocated to forward contracts, leaving no supply available for local refineries. This development comes despite reports indicating an increase in Nigeria’s crude output since the agreement was first implemented.
