Nigerians may soon face another hike in fuel prices as the Dangote Refinery is now purchasing crude oil from the Nigerian National Petroleum Company Limited (NNPCL) in dollars instead of naira.
NNPCL recently announced that it has stopped supplying crude to Dangote and other refineries under the Naira-for-Crude programme, which was initially introduced by the federal government.
There have been insinuations that NNPCL ended the programme because if the ongoing price war between it and Dangote Refinery.
However, NNPCL made a clarification to assure the public that it remains committed to supplying crude oil to the 650,000 barrels-per-day Dangote Refinery, although under new terms.
In a statement released by Olufemi Soneye, Chief Corporate Communications Officer of NNPCL, the company clarified that the Naira-for-Crude contract was a temporary six-month agreement that was always set to expire in March 2025.
“To clarify, the contract for the sale of crude oil in Naira was structured as a six-month agreement, subject to availability, and expires at the end of March 2025. Discussions are currently ongoing towards emplacing a new contract,” Soneye stated.
According to him, NNPCL has supplied over 48 million barrels of crude to the Dangote Refinery since October 2024, and a total of 84 million barrels since the refinery started operations in 2023.
With crude oil now being sold to Dangote Refinery in dollars, experts fear that fuel prices may increase as refining costs will be directly affected by exchange rate fluctuations.
Dangote Refinery was expected to help reduce Nigeria’s dependence on imported fuel and lower fuel prices. However, if the refinery has to buy crude at international market rates, it may be forced to adjust fuel prices accordingly.
As discussions continue between NNPCL and Dangote Refinery, Nigerians will be watching closely to see how this new arrangement affects the cost of fuel in the coming months.