Fuel Crisis Looms as FG Halts Naira-for-Crude Deal with Dangote, Depot Owners Raise Prices, and Marketers Stockpile Petrol in Fear of Hikes
A major fuel crisis may be on the horizon as the Federal Government suspends the sale of crude oil to the Dangote Refinery in naira, forcing petroleum marketers to anticipate a sharp increase in fuel prices.
Following the Dangote Petroleum Refinery’s announcement that it will no longer sell petroleum products in naira, several filling stations have begun stockpiling Premium Motor Spirit (PMS), commonly known as petrol. This move is fueled by fears that prices could surge in the coming days due to the suspension of the naira-for-crude arrangement.
Depot Owners Raise Prices Amid Panic Buying
Since the announcement, private depot owners in Lagos have reportedly increased petrol loading costs from below ₦850 per liter to around ₦900 per liter. As demand rises, industry players speculate that prices at the pump may soon follow suit.
The Independent Petroleum Marketers Association of Nigeria (IPMAN) has condemned depot owners for taking advantage of the situation, warning that such profiteering could harm the economy. IPMAN’s National Publicity Secretary, Chinedu Ukadike, also cautioned filling stations against panic buying, stating that those who stockpile petrol at high prices could face significant losses if Dangote Refinery eventually reduces rates.
Dangote Refinery Cites Dollar Constraints
The Dangote Refinery, which has a processing capacity of 650,000 barrels per day, attributed its decision to a growing mismatch between its sales revenue and crude oil procurement costs. The company explained that while it had been selling refined products in naira, it was purchasing crude in U.S. dollars, making the arrangement unsustainable.
“To date, our sales of petroleum products in naira have exceeded the value of naira-denominated crude we have received. As a result, we must temporarily adjust our sales currency to align with our crude procurement currency,” Dangote Refinery stated in an official announcement.
Government Yet to Address the Crisis
Despite growing concerns over potential fuel price hikes, the Federal Government has remained largely silent on the issue. However, sources from the Federal Ministries of Finance and Petroleum Resources confirmed that the Technical Sub-Committee on the Naira-for-Crude Policy would reconvene today to discuss possible solutions.
Government officials insist that the suspension of the deal is not permanent. Insiders revealed that the Nigerian National Petroleum Company Limited (NNPCL) has faced difficulties in supplying crude oil domestically, partly due to long-term crude sale agreements made to secure foreign loans.
FX Pressure and Industry Reactions
Analysts warn that the suspension of naira crude sales could exert additional pressure on the foreign exchange market. Without the naira-for-crude deal, oil marketers will now have to source U.S. dollars to purchase fuel, potentially weakening the naira further.
Hammed Fashola, the National Vice President of IPMAN, noted that the naira-for-crude policy had previously helped stabilize fuel prices and keep the local currency afloat. Its suspension, he argued, could reverse those gains and lead to increased inflation.
Meanwhile, domestic crude refiners have accused the government of deliberately frustrating Dangote’s operations, suggesting that the move could pave the way for a return to large-scale fuel importation. The Crude Oil Refinery-Owners Association of Nigeria described the development as a setback to Nigeria’s energy security efforts.
Talks Resume Today as Stakeholders Await Resolution
In response to the crisis, the Federal Government and Dangote Refinery are set to resume talks today. Industry players hope for a swift resolution that will prevent further disruptions in fuel supply and price instability.
With uncertainty surrounding fuel prices and foreign exchange implications, all eyes remain on the outcome of today’s negotiations, as Nigerians brace for the possibility of another round of fuel price hikes.
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