The Nigerian National Petroleum Company Limited has suspended the naira-for-crude oil swap arrangement with domestic refiners, including the Dangote Refinery and other private operators.
This decision, effective immediately, has raised concerns about its potential impact on Nigeria’s energy sector and the broader economy, according to BusinessDay.
According to sources privy to the information, NNPC has informed local refiners that its crude production is already committed to forward contracts, leaving no supply for domestic refining.
This decision comes despite reports of increased crude output since the deal’s inception, raising concerns that local refiners including Dangote Refinery may have to source crude internationally in dollars, leading to higher costs and fuel prices.
The naira-for-crude arrangement, launched on October 1, 2024, enabled local refiners to buy crude oil in naira rather than dollars.
It aimed to boost domestic refining, cut dependence on fuel imports, and strengthen the naira by reducing demand for foreign exchange.
The Dangote Refinery, owned by billionaire Aliko Dangote, has been a major beneficiary of the naira-for-crude deal, relying on local crude for its operations.
Analysts warn that the suspension could raise costs and potentially delay the refinery’s production timeline.
Other private refiners, including Waltersmith Petroman and BUA Refinery, are also likely to be affected.
The deal had offered them a cost-effective way to secure crude feedstock, helping them compete with international refiners.
The decision could hamper efforts to achieve self-sufficiency in petroleum production, a major objective of the federal government.
