For Nigeria’s domestic refiners, a key advantage has suddenly disappeared.
The NNPC has halted its naira for crude oil deal, forcing local refineries—including the much-anticipated Dangote Refinery—to secure crude oil in dollars instead.
A Policy Shift With Major Consequences
Since October 1, 2024, the scheme had boosted local refining, reduced reliance on imports, and eased pressure on Nigeria’s foreign exchange reserves.
However, with this sudden change, Nigerian refineries must now secure crude oil from international suppliers, increasing their financial burden and likely driving up fuel prices.
No Local Crude For Domestic Refineries
According to sources, NNPC has already committed all its crude output to forward contracts, preventing local refiners from accessing supply.
As a result, Dangote Refinery, which had depended on local crude for operations, now faces rising costs and potential delays.
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Private Refiners Also Affected
Likewise, other private refiners, such as Waltersmith Petroman and BUA Refinery, must now compete in the global market for crude, losing a cost-effective advantage that previously strengthened their businesses.
Economic Implications And Uncertain Future
Meanwhile, economists warn that this shift will intensify naira volatility, worsening Nigeria’s economic challenges.
Furthermore, this decision could derail the government’s push for self-sufficiency in petroleum production, setting back progress in the energy sector.
Now, industry leaders must find solutions to mitigate these challenges.
Will NNPC reconsider its stance? Can refiners adapt quickly? And how will this affect fuel prices for Nigerians? The coming months will reveal the true impact of this game-changing decision.
