Dangote Refinery Halts Naira Sales Amid NNPCL Crude Supply Disruptions
The Dangote Petroleum Refinery has temporarily suspended petroleum product sales in naira due to stalled naira-for-crude negotiations with NNPCL. Experts warn of forex pressure and rising fuel costs as marketers now need dollars to purchase petrol.
The Dangote Petroleum Refinery has temporarily suspended the sale of petroleum products in naira, following the breakdown of naira-for-crude negotiations between the $20 billion Lekki-based refinery and the Nigerian National Petroleum Company Limited (NNPCL).
In response to the refinery’s announcement on Wednesday, the cost of loading petrol at private depots in Lagos surged to N900 per litre, up from under N850 per litre before the decision.
Industry experts and oil marketers have expressed concerns that the suspension of naira-based sales could exert further pressure on Nigeria’s foreign exchange market, as traders will now require significant dollar reserves to purchase petroleum products.
Crude Forward Sales and Supply Challenges
Multiple industry sources have attributed the collapse of the naira-for-crude arrangement to NNPCL’s extensive forward sales of crude oil. It was revealed that the national oil company had committed substantial volumes of its yet-to-be-produced crude to secure loans from international financial institutions, limiting its ability to supply domestic refiners.
In an official statement, Dangote Group confirmed the temporary nature of the halt in naira sales.
“Dear valued customers, we wish to inform you that the Dangote Petroleum Refinery has temporarily halted the sale of petroleum products in naira. 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.”
Dangote Refinery also dismissed reports that the halt was due to ticketing fraud, calling such claims “malicious falsehoods.”
- The Need For Private Investigators To Review AMCON'S Operations Over The Last Decade
- How Non Payment Of Your Debt Affect Your Integrity
- Strengthening Fight Against Financial Fraud in Nigeria
- Understanding The Dangers of Financial Fraud And How To Stay Clean
Industry Reactions and Market Implications
A senior oil marketer, who spoke on condition of anonymity, pointed out that Nigeria relies on crude oil for over 90% of its foreign exchange earnings. Given that production has stagnated at around 1.6 million barrels per day, and a significant portion of future crude output has already been pre-sold to service debts, sustaining a naira-for-crude model appears increasingly difficult.
"The negotiations between NNPCL and Dangote Refinery seem to have collapsed. If both sides refuse to compromise, then a breakdown is inevitable,” the marketer stated.
NNPCL spokesperson, Olufemi Soneye, neither confirmed nor denied the reported halt of the naira-for-crude agreement but reiterated the company’s commitment to supplying crude to local refiners based on agreed terms.
"NNPC remains committed to supplying crude for local refining based on mutually agreed terms and conditions. Additionally, NUPRC has disclosed that all local refining companies collectively produce less than 50% of our national consumption. You can do the maths,” Soneye remarked.
Last week, NNPCL initiated fresh negotiations with Dangote Refinery regarding the renewal of the naira-for-crude deal, which began in October 2024 and expires this month. Since its inception, 48 million barrels of crude have been supplied to the Dangote facility.
With the suspension of naira sales, petroleum marketers will now need to source dollars to purchase products, a move that industry leaders warn could destabilize the naira’s recent gains.
MORE NEWS: How Nonpayment of Debts Undermines Your Integrity And Cripples Economies
Calls for Government Intervention
Hammed Fashola, National Vice President of the Independent Petroleum Marketers Association of Nigeria (IPMAN), urged the Federal Government to renegotiate the agreement with Dangote to prevent a resurgence in petrol prices.
The price of petrol depends on the exchange rate, crude price, and landing cost. While the recent landing cost was around N774.82 per litre, the market’s response to Dangote’s decision remains uncertain. If marketers scramble for dollars to buy fuel, the naira will weaken again,” Fashola stated.
According to Fashola, private depot owners have already begun reacting by raising their prices, with petrol now selling at N835 to N836 per litre—up from N825 to N826 just a day earlier.
Billy Gillis-Harry, President of the Petroleum Products Retail Outlet Owners Association of Nigeria (PETROAN), echoed similar concerns, cautioning that the refinery’s move could trigger another fuel price surge. However, he noted that the Federal Government has yet to make a definitive decision on discontinuing the naira-for-crude deal.
“We were in a meeting on Wednesday discussing this issue, and no formal decision has been made yet. If the naira-for-crude deal is halted, fuel prices will rise again. But for now, Dangote may just be speculating,” Gillis-Harry explained.
ADVERT
Potential Market Shake-up
The naira-for-crude arrangement previously allowed Dangote Refinery to lower fuel prices, forcing NNPCL to follow suit, despite the impact on its profit margins. Industry insiders speculate that the government’s reluctance to supply naira-based crude may be a strategic move to limit Dangote’s growing dominance in the downstream sector.
As the debate continues, stakeholders await further clarity from the Federal Government, hoping for a resolution that maintains stability in Nigeria’s petroleum market.
Kindly share this story:
Contact: report@probitasreport.com
Stay informed and ahead of the curve! Follow The ProbitasReport Online News Report on WhatsApp for real-time updates, breaking news, and exclusive content especially when it comes to integrity in business and financial fraud reporting. Don't miss any headline – and follow ProbitasReport on social media platforms @probitasreport
[©2025 ProbitasReport - All Rights Reserved. Reproduction or redistribution requires explicit permission.]
What's Your Reaction?
