The price of petrol is expected to rise sharply as Dangote Petroleum Refinery has temporarily stopped selling fuel in naira, following the collapse of talks with the Nigerian National Petroleum Company Limited (NNPCL) over the naira-for-crude oil deal.
The refinery announced its decision on Wednesday, stating that the halt was necessary due to a mismatch between its sales revenue and crude oil purchase obligations, which are priced in U.S. dollars.
Naira-for-Crude Deal Collapses
Industry insiders say the breakdown in negotiations is due to the NNPCL’s extensive forward sales of crude oil to secure loans from international lenders. As a result, the company has limited crude available for domestic supply.
“The national oil company has already sold much of its future crude production to settle financial obligations, leaving little for local refiners,” an industry expert revealed.
The Dangote Group assured Nigerians that the suspension was only temporary. “We remain committed to serving the Nigerian market efficiently and sustainably. As soon as we receive an allocation of naira-denominated crude from NNPCL, we will promptly resume sales in naira,” the company said in a statement.
Petrol Prices Surge
The impact of Dangote’s decision was immediate, with petrol loading costs at private depots in Lagos increasing to N900 per litre from below N850 per litre before the announcement.
Hammed Fashola, National Vice President of the Independent Petroleum Marketers Association of Nigeria (IPMAN), warned that the naira’s recent stability could be threatened.
“If marketers rush to buy dollars for petrol purchases, the naira could weaken again. Let’s wait and see how the market reacts,” he said.
Depot owners have already started adjusting prices upward. Chipet Depot increased its loading price from N835 to N900 per litre, while Rainoil, Wosbab, and Pinnacle depots raised prices from around N826 to N835 per litre.
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Calls for Government Action
Marketers and oil industry experts have urged the Federal Government to reconsider its stance on the naira-for-crude deal to avoid further price hikes.
“We appeal to the government to keep supplying crude to Dangote and other local refiners. If this deal collapses completely, petrol prices will rise, hurting ordinary Nigerians,” Fashola added.
Billy Gillis-Harry, President of the Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN), echoed this concern.
“Dangote’s suspension of fuel sales in naira will push prices higher. The government must clarify its position because a complete cancellation of the naira-for-crude deal would be devastating,” he said.
Refiners Fear a Return to Fuel Imports
Local crude oil refiners believe that ending the naira-for-crude deal could be a strategic move to weaken the Dangote refinery and restore full reliance on imported fuel.
“If the government allows this deal to fail, Nigeria may have to return to full-scale fuel importation, which will weaken the naira and drive up petrol prices,” warned Eche Idoko, National Publicity Secretary of the Crude Oil Refinery Owners Association of Nigeria.
Meanwhile, oil expert Olatide Jeremiah fears that loading costs could hit N1,000 per litre if a solution is not reached within the next 48 hours.
“The situation is worsening quickly. If the government doesn’t act fast, Nigerians could see another major increase in fuel prices,” he cautioned.