Nigeria’s fuel market is on the brink of turmoil as the Federal Government suspends the sale of crude oil to Dangote Petroleum Refinery in naira, prompting fears of a price hike and panic buying among petroleum marketers.
Following Dangote Refinery’s decision to halt the sale of petroleum products in naira due to unresolved negotiations with the Nigerian National Petroleum Company Limited (NNPCL), private depot owners have raised prices, and some filling stations have begun stockpiling fuel in anticipation of a price surge according to The PUNCH.
Depot owners in Lagos have already increased the cost of petrol loading to about N900 per litre, up from N850 per litre, further stoking concerns of an imminent price hike. While the Independent Petroleum Marketers Association of Nigeria (IPMAN) has warned against panic buying, retailers continue to hoard fuel, expecting higher profits when prices rise.
Last week, Dangote Refinery, which has a 650,000 barrels-per-day capacity, announced it was suspending naira-based sales, citing a mismatch between its sales revenue and crude purchase obligations, which are currently denominated in US dollars.
“Dear valued customers, we wish to inform you that the Dangote Petroleum Refinery has temporarily halted the sale of petroleum products in naira,” the company stated. “To date, our sales of petroleum products in naira have exceeded the value of naira-denominated crude we have received.”
As the refinery remains silent on the next steps for marketers, private depot owners have seized the moment to increase fuel prices, while filling stations are stockpiling supplies to sell at higher prices later.
IPMAN’s National Publicity Secretary, Chinedu Ukadike, has criticised depot owners for taking advantage of the crisis, urging marketers to avoid hoarding fuel to prevent potential financial losses.
“Some depot owners are already increasing prices. However, we are advising our marketers not to panic-buy because when Dangote Refinery resumes and lowers prices, those who stockpiled will suffer huge losses,” Ukadike warned.
Despite the ongoing uncertainty, he reassured that discussions between the Federal Government and Dangote Refinery were progressing and could soon lead to the resumption of the naira-for-crude deal.
Sources within the Federal Ministries of Finance and Petroleum Resources confirmed that the Technical Sub-Committee on the Naira-for-Crude Policy will reconvene today to review the deal.
While officials insist the suspension is temporary, industry insiders blame the situation on NNPCL’s excessive forward sales of crude oil, which have limited domestic availability.
Industry experts warn that if Dangote Refinery continues pricing its products in dollars, it could drive up demand for foreign exchange, weakening the naira further.
Adding to concerns, new reports indicate that seven vessels carrying 154.22 million litres of imported petrol are expected to arrive in Nigeria this week. This signals a potential return to heavy fuel imports, a move experts say could undermine Dangote Refinery and other local producers.
The crisis traces back to long-standing allegations by Dangote Group that international oil companies (IOCs) were frustrating its operations by refusing to supply crude locally and instead selling at a premium through foreign middlemen. Despite the Federal Executive Council’s 2024 decision to sell domestic crude in naira, challenges persist.
With negotiations ongoing, the market remains volatile. Analysts say if the government fails to restore the naira-for-crude deal, Nigerians should brace for higher fuel prices, increased import dependence, and further pressure on the naira.
