BREAKING: Nigerian Govt, Dangote Refinery Continue Discussions On Naira-For-Crude Policy Renewal

The future of Nigeria’s Naira-for-Crude policy remains uncertain as sources close to the ongoing negotiations suggest that all parties involved are set to reconvene soon to determine the next steps.

The six-month agreement between the Nigerian National Petroleum Company Limited (NNPCL) and the Dangote Petroleum Refinery officially expired on March 31, 2025, without renewal. This has led to the suspension of the refinery’s sale of refined petroleum products in Naira.

Despite the suspension, the Dangote refinery has continued to process crude oil, with reports indicating that approximately 400,000 barrels per day (bpd) of crude have been processed in 2025 so far.

Notably, 35% of this crude supply has come from international imports, with significant quantities sourced from Brazil and Equatorial Guinea, marking a shift from local supply constraints.

A source familiar with the deal’s progression revealed to The Punch that although the policy is under review, its future impact on the national economy, particularly concerning fuel prices and the foreign exchange rate, cannot be ignored.

The source noted, “The initiative is going to continue because it has had a significant impact not only on fuel prices but also on other economic indicators, including the foreign exchange rate.”

The Naira-for-Crude policy was introduced in October 2024 to reduce Nigeria’s reliance on fuel imports, with the aim of improving fuel supply and stabilizing prices.

As of now, no official agreement has been reached to extend the initiative. The Nigerian National Petroleum Corporation (NNPC) had delivered 48 million barrels of crude oil under the arrangement, with the total supply since 2023 standing at 84 million barrels.

A senior government official, speaking under condition of anonymity, said the committee in charge of the policy was awaiting further recommendations from the Nigeria Upstream Petroleum Regulatory Commission before moving forward.

The official emphasized that the next steps would depend on the commission’s findings.

Despite efforts to manage supply under the Naira-for-Crude deal, Dangote Refinery has faced challenges, with NNPC failing to meet its supply commitments.

According to data from the Commodity Analysis System (CAS), NNPC only delivered about a third of the promised 300,000 bpd, significantly affecting the refinery’s operations.

In response, Dangote has been sourcing crude oil from alternative markets, including Brazil, with Petrobras delivering a cargo of Tupi crude on March 26, 2025.

A Dangote executive, speaking to S&P Global, expressed significant uncertainty regarding the future of the Naira-for-Crude arrangement, stating, “We are not even certain if it will be renewed or if it will proceed at all.”

The executive also highlighted the financial strain caused by the Naira-based pricing structure, which left the refinery exposed to volatile exchange rates.

“It’s not commercially advantageous for us,” the source said, noting the risk of price fluctuations when buying and selling oil products in Naira.

As the Naira-for-Crude deal remains unresolved, Dangote Refinery has turned to global suppliers, with plans to expand its crude supply sources. Brazil’s Petrobras and Equatorial Guinea have joined the list of global suppliers for the refinery.

This global expansion is a direct response to Nigeria’s domestic supply limitations, which have been compounded by political and logistical hurdles.

The refinery’s shift towards international suppliers underscores the strain between Dangote and NNPC, particularly in light of the latter’s underdelivery on crude oil supplies.

As negotiations continue, the future of the Naira-for-Crude arrangement remains unclear. While NNPC is expected to supply crude oil to Dangote for April, details regarding payment terms and the continuation of the deal are yet to be agreed upon.

According to sources, NNPC has allocated seven crude oil cargoes for April, which will deliver approximately 245,000 bpd, but the terms for payment remain unsettled.