NNPCL, Dangote and the Crude Supply Mess
By Umar Farouk Bala
For a brief moment, Nigerians dared to hope. Fuel supplies had stabilized, and prices, after months of turbulence, had begun to ease. But just as the nation exhaled, Dangote Refinery’s sudden shift in policy sent fresh waves of uncertainty rippling through the economy.
On March 19, 2025, the refinery announced that it would temporarily sell petroleum products exclusively in U.S. dollars, citing a mismatch between its crude oil purchase obligations—denominated in dollars—and its local sales, which had been conducted in Naira.
In a statement that rattled the industry, Dangote Refinery explained: “Dear valued customers, we wish to inform you that the Dangote Petroleum Refinery has temporarily halted the sale of petroleum products in Naira.
“This decision is necessary to avoid a mismatch between our sales proceeds and our crude oil purchase obligations, which are currently denominated in U.S. dollars.
“To date, our sales of petroleum products in Naira have exceeded the value of Naira-denominated crude we have received. As a result, we must temporarily adjust our sales currency to align with our crude procurement currency.”
Despite this unsettling shift, the refinery assured Nigerians that it remained committed to local supply and would resume selling in Naira once the Nigerian National Petroleum Company Limited resumed crude oil allocations in local currency.
This crisis did not emerge overnight. In October 2024, the Federal Government had announced an agreement for NNPCL to supply Dangote Refinery with crude in Naira for an initial six-month period—an arrangement set to expire in March 2025.
But when the deadline came, the agreement was not renewed, forcing Dangote to turn to the international market for crude purchases.
On March 10, 2025, NNPCL attempted to quell concerns, stating: “To clarify, the contract for the sale of crude oil in Naira was structured as a six-month agreement, subject to availability, and expires at the end of March 2025.
“Discussions are currently ongoing towards emplacing a new contract. NNPC Limited remains committed to supplying crude oil for local refining based on mutually agreed terms and conditions.”
Yet, the critical question remains: why did NNPCL allow the agreement to lapse before initiating renewal negotiations?
Given the economic benefits of local refining and the role of the Naira-for-Crude policy in stabilizing fuel prices, ensuring a seamless transition should have been a top priority. Instead, the delay has resulted in another surge in pump prices, with fuel costs in Lagos jumping from ₦860 to ₦900 per litre overnight.
Industry experts point to two possible explanations. The first is Nigeria’s external crude supply obligations. The Federal Government may have already allocated a significant portion of its daily crude production to service international debt agreements, leaving little room for local supply deals.
With Nigeria struggling to meet its 2.2 million barrels per day OPEC quota, there might not be enough crude left to sustain domestic agreements. The second theory revolves around market dynamics and corporate rivalries.
Dangote Refinery’s push for lower domestic fuel prices may have triggered resistance from other market players. Pricing disputes and the struggle for market dominance could be influencing NNPCL’s reluctance to commit to new agreements.
Whatever the case, one thing is clear: ordinary Nigerians are once again paying the price. The entire premise of removing fuel subsidies was built on the promise that local refining would shield Nigerians from the volatility of international markets.
The Naira-for-Crude arrangement was a crucial step toward achieving this goal. If Nigeria is serious about energy security, the Federal Government must act swiftly.
The Presidency, the Ministry of Petroleum Resources, and NNPCL must work urgently to reinstate and formalize a long-term Naira-for-Crude policy that ensures stability in fuel pricing.
Rather than allowing bureaucratic delays and corporate maneuvering to dictate policy, the government must recognize that energy affordability is not just an economic issue—it is a matter of national stability.
For too long, Nigerians have endured an oil economy that works against them. The time for excuses is over. It is time to prioritize the interests of the people.
Umar Farouk Bala is a serving corps member with PRNigeria, in Abuja. He can be reached at: [email protected].
