FG Acts on Naira-for-Crude Deal as Petrol Prices Surge

The Federal Government of Nigeria has convened a panel to resolve the naira-for-crude agreement deadlock after Dangote Refinery ceased selling petroleum products in naira, sparking petrol price hikes at private depots nationwide.

A technical sub-committee, formed by the Federal Ministry of Finance and the Federal Ministry of Petroleum Resources, will meet on Monday, March 22, to assess solutions ensuring continued product supply to the Dangote refinery. The Nigerian Upstream Petroleum Regulatory Commission (NMPDRA) has been tasked with presenting actionable options to help revive the agreement.

Challenges in crude oil supply to Dangote Refinery stem from the Nigerian National Petroleum Corporation Limited’s (NNPCL) allocation of significant crude volumes to foreign creditors, settling loans acquired by the firm. This diversion complicates sustaining the naira-for-crude deal.

Reacting to the supply disruption, Dangote Refinery temporarily suspended petroleum sales in naira. In a statement on X, Dangote Group explained that the move aimed to avoid a mismatch between sales proceeds and crude purchase obligations, currently denominated in U.S. dollars. The statement clarified: “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.”

The group also dismissed online claims linking the suspension to ticketing fraud, calling them “malicious falsehood,” and assured that the refinery’s systems remain secure with no fraud-related concerns.

Rising Petrol Prices

Dangote Refinery’s decision to halt petrol sales in naira has sent shockwaves through the petroleum sector, prompting marketers to explore alternative supply channels while preparing for potential market volatility. By Thursday, depot prices had already surged. Parker Depot raised its loading price from N852 to N875 per litre. Matrix Warri increased its price by N22, reaching N875 per litre. Zamson Depot followed, jumping from N853 to N875 per litre. Rainoil Depot matched the adjustment, while Pinnacle Warri and Sobaz elevated their prices from N854 and N870 to N875 per litre, respectively.

Billy Gillis-Harry, National President of the Petroleum Products Retail Outlet Owners Association of Nigeria (PETROAN), assured that marketers are prepared to counter unforeseen disruptions. Hammed Fashola of the Independent Petroleum Marketers Association of Nigeria (IPMAN) urged the Federal Government to maintain the naira-for-crude arrangement to stabilize fuel prices.

Depot Price Adjustments

Recent reports show oil marketers are buying petroleum products at higher rates, raising concerns over possible fuel price increases at filling stations. The hike in depot prices is attributed to shifts in the petroleum market following Dangote’s decision to stop selling petrol in naira. While petrol prices at filling stations have remained below N1,000 in recent weeks, fears persist that they could soon climb higher.