Naira-for-Crude Deal Kicks Off Tuesday, Nigerians Anticipate Lower Fuel Prices

The Nigerian government has confirmed that the much-anticipated Naira-for-crude initiative will begin on Tuesday, October 1, 2024. Under this scheme, the Nigerian National Petroleum Company Limited (NNPC) will supply crude oil to the Dangote Refinery in exchange for payment in Naira, a move aimed at reducing the cost of Premium Motor Spirit (PMS), commonly known as petrol.

In a statement on Sunday, Dare Adekanmbi, spokesperson for Zacch Adedeji, Chairman of the Technical Sub-Committee on Domestic Sales of Crude Oil in Local Currency, confirmed the start of the crude supply deal. Adedeji, who also serves as Chairman of the Federal Inland Revenue Service (FIRS), has been instrumental in pushing forward the arrangement.

Adekanmbi assured that preparations for the deal’s launch were on track, stating, “The Chairman, Sub-Technical Committee, Zacch Adedeji, is working day and night to ensure that things go according to plan. He understands the significance of this initiative for Nigerians.”

The Naira-for-crude plan was approved by the Federal Executive Council in September 2024 under the leadership of President Bola Tinubu. The agreement includes the supply of approximately 385,000 barrels of crude oil per day (bpd) to the Dangote Refinery, with payments made in Naira. In turn, the refinery will release an equivalent volume of refined products, including diesel and petrol, for the domestic market.

This deal is expected to deliver about 11.5 million barrels of crude oil monthly to the Dangote Refinery, with the resulting refined products priced in local currency, a development that many believe will help stabilize fuel prices across the country.

However, Eche Idoko, Publicity Secretary of the Crude Oil Refinery-Owners Association of Nigeria, has urged the government to expand the Naira-for-crude deal beyond Dangote Refinery. “The committee is only discussing with Dangote at the moment,” he said, advocating for similar agreements with other modular refineries in the country.

The Naira-based crude sale is expected to ease the burden of rising fuel costs, with industry stakeholders predicting a reduction in petrol prices once the plan is fully implemented. Billy Gillis-Harry, National President of the Petroleum Products Retail Outlets Owners Association of Nigeria, expressed optimism, noting in August 2024 that local pricing could see significant improvements when crude is supplied to local refineries in Naira.

Fuel prices have remained high across Nigeria, with consumers paying between N950 and N1,100 per litre since mid-September after the NNPC announced new price hikes. These increases followed the initial release of petrol from the Dangote Refinery, priced at N898 per litre. However, the refinery, valued at $20 billion, has yet to fully disclose its product pricing.

Aliko Dangote, President of the Dangote Group, has previously claimed that the refinery’s petrol is cheaper than imported alternatives but has not provided specific figures. The House of Representatives has called on the refinery to reveal its pricing structure, but this information remains confidential.