Dangote Stops Fuel Supply to Nigeria as Naira-for-Crude Deal Fails

The supply of fuel from Dangote Refinery to the Nigerian market has come to a halt following the collapse of its naira-for-crude agreement with the Nigerian National Petroleum Company (NNPC). 

This unexpected development has sparked concerns about fuel availability and potential price increases.

Why did Dangote stop supplying fuel?The naira-for-crude deal allowed Dangote Refinery to buy crude oil in naira and sell refined products to local marketers in the same currency. This arrangement was meant to stabilize fuel supply and reduce Nigeria’s reliance on expensive dollar-based fuel imports. 

However, with the deal now terminated, Dangote Refinery must purchase crude in dollars, making local supply less favorable.

Instead of supplying Nigeria, the refinery has shifted focus to exporting fuel, where it can earn in foreign currency. This move raises fears that Nigerians could face another round of fuel price hikes if domestic supply becomes tighter.

NNPC’s position on the issueAccording to Olufemi Soneye, NNPC’s Chief Corporate Communications Officer, the company has supplied over 48 million barrels of crude oil to Dangote Refinery since October 2024, bringing the total supply to more than 84 million barrels since the refinery’s launch. 

However, the current agreement is set to expire at the end of March 2025, and negotiations for a new deal are still ongoing.

The government had initially dismissed claims that the naira-for-crude policy was being discontinued. But now, with Dangote stepping back from local supply, the impact is becoming more evident.

What happens next?The end of this agreement could have serious economic implications. If Dangote Refinery continues to prioritize exports over domestic sales, fuel prices in Nigeria could rise even higher. The Nigerian government and industry stakeholders are under pressure to resolve the situation before it leads to a major fuel crisis.

For now, all eyes are on the negotiations. Will a new deal be reached to restore supply to the local market? Or will Nigerians have to brace for another round of fuel scarcity? Time will tell.