The Nigerian oil and gas downstream sector is bracing for further fuel price increases as uncertainty looms over the renewal of the naira-for-crude deal between the Nigerian National Petroleum Company Limited (NNPCL) and Dangote Petroleum Refinery.
The six-month agreement, which commenced in October 2024, officially expires today, March 31, 2025, and negotiations on its extension remain inconclusive. Industry insiders revealed that discussions between the parties involved have stalled, leaving market forces to dictate fuel pricing.
Within a week, the pump price of petrol has surged from approximately N860 per litre to over N930 per litre. Marketers anticipate that if the impasse persists, fuel prices may soar to N1,000 per litre in the coming weeks.
A senior official in the Ministry of Finance confirmed that no significant progress had been made in negotiations, with no meetings held in the past week.
“Nothing new has happened. Probably after the holidays, the committee will reconvene,” the official stated.
The naira-for-crude agreement was introduced on October 1, 2024, to curb escalating petrol prices by allowing Dangote Refinery to purchase crude oil in local currency. Since the deal’s inception, NNPCL has supplied 84 million barrels of crude oil to the refinery, with 48 million barrels transacted under the naira-for-crude arrangement.
However, on March 19, 2025, Dangote Refinery announced a suspension of petroleum product sales in naira, citing financial misalignment.
“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, which is currently denominated in US dollars,” the company stated.
Following Dangote’s announcement, private depot petrol loading costs in Lagos skyrocketed from less than N850 per litre to about N900 per litre. Retail pump prices also spiked, with petrol selling for N930 per litre in Lagos, N950 in Abuja, and N960 in northern regions. Industry analysts attributed the price escalation to NNPCL’s crude supply constraints, as significant portions of its crude reserves were pledged as collateral for international loans.
Chinedu Ukadike, the National Publicity Secretary of the Independent Petroleum Marketers Association of Nigeria (IPMAN), expressed concern over the growing crisis. “We have called for a stakeholders’ meeting to address this issue.
The meeting was originally scheduled for this week but has been postponed to May 1, 2025, due to the Sallah and Easter holidays. If the government does not reinstate the naira-for-crude deal, we may see petrol prices exceed N1,000 per litre,” Ukadike warned.
IPMAN officials revealed that marketers have suffered losses exceeding N200 billion due to price fluctuations over the past six months.
“When we purchase at one price, and by the time the vessels discharge, Dangote lowers the price, we bear the loss. This discourages bulk purchasing and disrupts the supply chain,” Ukadike explained.
The Vice President of IPMAN, Hammed Fashola, also voiced his dismay over the situation, emphasizing that the naira-for-crude deal was a crucial buffer against volatile international market forces.
“While crude oil prices and exchange rates are major determinants of petroleum prices, the naira-for-crude agreement helped stabilize local fuel costs. We urge the government to reconsider the agreement for the benefit of Nigerian consumers,” Fashola stated.
Depot owners, however, argue that the naira-for-crude deal had negative implications for the broader economy. Members of the Depot and Petroleum Products Marketers Association of Nigeria (DAPPMAN) insist that market-based pricing mechanisms should prevail.
