The price of petrol in Nigeria is expected to rise further as negotiations over the naira-for-crude deal between the Nigerian National Petroleum Company Limited (NNPCL) and the Dangote Petroleum Refinery remain unresolved. This deal, which allowed Dangote Refinery to purchase crude oil in naira instead of U.S. dollars, officially ended on Monday, March 31, 2024, with no clear decision on its renewal.
Over the past week, petrol prices have already jumped from about N860 per litre to over N930 per litre, causing concern among industry stakeholders and consumers alike. Marketers warn that the price could hit N1,000 per litre soon if the deal is not reinstated.
Uncertainty Over the Naira-for-Crude Deal
The naira-for-crude arrangement, introduced in October 2024, was meant to reduce fuel import costs, stabilize pump prices, and strengthen the local currency. Under this deal, NNPCL supplied 48 million barrels of crude oil to Dangote Refinery, helping to keep petrol prices relatively stable.
However, discussions over its renewal have stalled. A senior official in the finance ministry confirmed that no significant progress has been made.
“Nothing new has happened. Probably after the holidays, the committee will sit and meet,” the official said.
The uncertainty worsened on March 19 when Dangote Refinery announced that it would no longer sell petroleum products in naira due to financial mismatches.
“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,” the refinery announced.
Following this decision, private depot prices in Lagos surged from N850 per litre to about N900 per litre, further pushing up pump prices across the country. In Lagos, petrol now sells for N930 per litre, in Abuja N950 per litre, and in the northern regions, N960 per litre.
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Dealers and Marketers React
Oil marketers blame the Federal Government for failing to renew the agreement, warning that Nigerians should not be left to suffer due to the influence of the dollar.
Chinedu Ukadike, the National Publicity Secretary of the Independent Petroleum Marketers Association of Nigeria (IPMAN), emphasized the need for urgent discussions.
“Because of this issue, we’ve called for a stakeholders’ meeting. We are going to meet to discuss it and come out with a way forward. We clamoured that crude oil should be sold in naira, and any deviation would affect us,” Ukadike said.
The meeting, which was initially scheduled for this week, has been postponed to May 1, 2025, due to the Easter and Sallah holidays.
Meanwhile, marketers report heavy losses due to the fluctuating prices.
“We have lost over N200 billion because of the price fluctuations in the last six months. When we buy at a price and vessels load, by the time they get to the depots, Dangote has reduced the price again. That little difference is borne by the marketer, making it difficult to go back and buy after selling at a loss,” Ukadike explained.
A Looming Crisis
Many industry players believe the naira-for-crude arrangement was helping to keep petrol prices in check. IPMAN Vice President Hammed Fashola warned that if the deal is not restored, Nigerians may soon pay over N1,000 per litre.
“It’s unfortunate the price of petrol is going up again. The cause of this is the Dangote Refinery and the naira-for-crude issue. We noticed that when Dangote announced the stoppage of the contract, depot owners immediately increased their prices,” he said.
Fashola urged the Federal Government to reconsider the agreement, stating that it was a “game changer” in the Nigerian petroleum market.
“The naira-for-crude deal was working well before it was terminated. I think they can still renew it. At least, that would help to stabilize prices and ease the burden on Nigerian citizens,” he added.
Higher Prices and Cost of Living
As petrol prices climb, transportation fares have already increased, putting additional pressure on the cost of living. Nigerians, who had hoped for some relief, now face rising expenses once again.
The Federal Government has yet to officially respond to the crisis, but sources indicate that NNPC may make a statement after the Sallah break.
“When MRS talks, it’s Dangote talking. MRS has announced new prices. I am sure that after the holiday, NNPC will react too. For Lagos, the price is now N905 per litre, outside Lagos like Ogun State, it’s around N911 per litre, while the pump price in Lagos is N930 per litre,” Fashola stated.