Dangote Petroleum Refinery has temporarily halted the sale of petroleum products in naira, signaling a major breakdown in the much-anticipated naira-for-crude agreement with the Nigerian National Petroleum Company Limited (NNPCL).
The decision, announced on Wednesday, March 20, has already triggered an immediate rise in petrol prices at private depots in Lagos, with the loading price surging to N900 per litre—a sharp jump from the previous N850 per litre. Experts warn that this development could place tremendous pressure on Nigeria’s foreign exchange market, as fuel marketers and dealers scramble to secure US dollars for transactions, potentially weakening the naira further.
Multiple industry sources have pointed to NNPCL’s heavy forward sales of crude oil as a key reason behind the collapse of the naira-for-crude arrangement.
In an effort to secure loans from international lenders, Nigeria’s national oil company had already committed large portions of its future crude production, leaving it with little to no room to supply local refiners like Dangote.
In an official statement, the Dangote Group clarified that the suspension of naira sales is temporary, explaining:
“This decision is necessary to avoid a mismatch between our sales proceeds and our crude oil purchase obligations, which are currently denominated in US 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.”
Additionally, the refinery refuted online rumors of ticketing fraud, calling them “a malicious falsehood”, and reaffirmed its commitment to serving the Nigerian market sustainably.
Industry experts sound the alarm
Oil marketers and industry stakeholders have reacted with concern, highlighting the potential economic and market consequences of Dangote’s decision.
A top industry insider, who spoke anonymously, described the situation as a major red flag for Nigeria’s foreign exchange stability, noting that “Nigeria generates over 90 percent of its foreign exchange from crude oil sales. But with production stuck at around 1.6 million barrels per day, and a significant portion already sold in advance, it’s clear that sustaining a naira-for-crude deal was always going to be difficult. If someone has a workable solution, I’d love to hear it.”
Meanwhile, Olufemi Soneye, NNPCL’s spokesperson, declined to confirm whether the agreement had been formally abandoned, but insisted that the company remains committed to supplying crude for local refining under mutually agreed terms.
As tensions rise, sources close to the negotiations confirmed to The PUNCH that discussions between Dangote and the Technical Sub-Committee had collapsed due to a lack of available crude.
As the Dangote refinery suspends naira sales, marketers will now need to source dollars to buy fuel, adding further volatility to an already fragile forex market.
Hammed Fashola, National Vice President of the Independent Petroleum Marketers Association of Nigeria (IPMAN), warned that this could cause another wave of naira depreciation, undoing recent gains.
“Petrol prices depend on the exchange rate and crude costs. If marketers start scrambling for dollars, the naira will come under pressure again. We need to wait and see how the market reacts, but this is a serious concern.”
Fashola urged the Federal Government to reconsider the naira-for-crude agreement, warning that price hikes could soon follow.
According to him, “depot owners are already adjusting their prices upwards. Just yesterday, we closed at N825 per litre, and now it’s moving to N836 per litre. If crude supply to local refiners isn’t maintained, we could lose the fuel price stability that Nigerians have come to expect.”
Fuel retailers and local refiners have also raised concerns about the impact of halting the naira-for-crude deal, with many seeing it as an attempt to push Dangote out and restore full-scale fuel importation.
Billy Gillis-Harry, President of the Petroleum Products Retail Outlet Owners Association of Nigeria (PETROAN), emphasized that marketers strongly oppose ending the deal:
“This deal has been beneficial to Nigerians, and its suspension will push prices back up. We just left a heated meeting with government officials where we made it clear that naira-for-crude should stay.”
Similarly, Eche Idoko, National Publicity Secretary of the Crude Oil Refinery-Owners Association of Nigeria (CORAN), argued that some players in the sector were trying to sabotage the success of local refining:
“Some people are blinded by the fact that Dangote is benefiting from this deal. But the bigger picture is that it helps all Nigerians by reducing dependence on imports. If this deal collapses, we are heading back to full-scale petrol importation—and that’s bad for the economy.”
In response to the uncertainty, private depot owners have already started increasing petrol prices.
Chipet Depot raised its price from N835 to N900 per litre while Rainoil Depot increased from N830 to N835 per litre.
Wosbab, Pinnacle, MRS Tincan, and Nipco all raised their prices to N835 per litre.
Several depots, including Bovas, Aipec, Menj, and Integrated, halted petrol sales altogether.
Industry analyst Olatide Jeremiah, CEO of petroleumprice.ng, warned that if Dangote and NNPCL fail to reach a deal within 48 hours, petrol pump prices could hit N1,000 per litre
“This situation confirms Dangote’s position as the market leader in the downstream sector. If NNPCL doesn’t act fast, we will see a fresh fuel price crisis that could destabilize the economy.”
Amidst rising tensions, Finance Minister Wale Edun met with Aliko Dangote on Tuesday to discuss the future of the agreement. While no concrete decision has been announced, insiders suggest that the government is struggling to maintain the deal, given the shortage of crude available for local refiners.
