Fuel Crisis Deepens as Naira-for-Crude Deal Hangs in the Balance

Nigeria’s downstream oil and gas industry is grappling with heightened uncertainty as stakeholders eagerly await the government’s decision on the continuation of the naira-for-crude arrangement between the NNPCL and Dangote Petroleum Refinery.

This six-month agreement, initiated in October 2024, reaches its official conclusion today, March 31, 2025.

However, there has been no official announcement regarding its extension or termination, leading to growing concerns within the sector.

This uncertainty has already impacted fuel prices significantly, with petrol costs surging from ₦860 per litre to over ₦930 per litre in just a week.

Should the government decide against renewing the agreement, industry analysts predict that prices could exceed ₦1,000 per litre.

Compounding the situation, Dangote Refinery has scheduled maintenance for its petrol production unit in June, which could further strain fuel supply and exacerbate market instability.

A government source within the Ministry of Finance disclosed that no meaningful progress has been made in renegotiating the deal, and discussions may only resume after the ongoing holiday period.

The initial purpose of the naira-for-crude agreement was to stabilize fuel supply, reduce Nigeria’s reliance on expensive imports, and lower fuel costs for consumers.

However, the uncertainty surrounding its continuation has triggered supply disruptions and a surge in prices.

The crisis intensified on March 19, 2025, when the Dangote refinery halted sales of petroleum products in naira, citing an imbalance between local revenue generation and crude oil procurement, which requires US dollars.

This shift led to an immediate increase in petrol prices at private depots in Lagos, rising from under ₦850 per litre to approximately ₦900.

Consequently, filling stations adjusted their pump prices, with Lagos stations selling at ₦930 per litre, Abuja at ₦950, and northern states experiencing rates as high as ₦960 per litre.

As the situation escalates, industry stakeholders are calling for urgent intervention. The Independent Petroleum Marketers Association of Nigeria (IPMAN) has been advocating for a stakeholders’ meeting to address the crisis.

Originally the meeting was scheduled for this week, but has now been postponed to May 1, 2025, due to the overlapping Sallah and Easter celebrations.

IPMAN’s National Publicity Secretary, Chinedu Ukadike, voiced frustration over the ongoing volatility in fuel prices, stating that petroleum marketers have suffered losses exceeding ₦200 billion over the past six months.

Many bulk buyers remain hesitant to make purchases due to the significant financial risks involved.

Dealers attribute the relentless price hikes to the government’s failure to extend the naira-for-crude deal, leaving marketers struggling to navigate an increasingly unpredictable market.

The absence of clear direction from authorities has exacerbated financial instability, heightening the risk of prolonged fuel scarcity and further economic strain on consumers and businesses alike.