Federal Government Reinstates Naira-for-Crude Policy to Support Local Refineries, Strengthen Energy Security, and Ease FX Pressure
There is a fresh wave of relief in Nigeria’s downstream petroleum sector as the Federal Government has reaffirmed its commitment to supplying crude oil to local refineries in Naira instead of Dollars.
The Naira-for-Crude policy, initially approved by the Federal Executive Council (FEC) in October last year, suffered a brief suspension in March. However, the Technical Sub-Committee on Crude and Refined Products Sales in Naira met last week and announced the government’s full commitment to the initiative, describing it as a permanent arrangement to “support local refining, bolster energy security, and reduce reliance on foreign exchange in the domestic petroleum market.”
The temporary halt had sparked concerns of a possible plot to frustrate the Dangote Refinery amid its market tussle with the Nigerian National Petroleum Company Limited (NNPCL). It also threatened the optimism surrounding Nigeria’s recent recovery of local refining capacity, which had been largely dormant for over three decades despite repeated failed turnaround maintenance of government-owned refineries.
Experts say the Naira-for-Crude policy is a practical solution. If refineries are forced to source foreign exchange to stay operational, it could disrupt production, worsen FX shortages, and keep pump prices high. The initiative aims to shield refineries from global market shocks and gradually reduce the cost of refined products in the local market.
The Federal Government has been urged to intensify efforts to meet its OPEC daily production quota of 2.2 million barrels per day. This would ensure a steady supply of crude for domestic use and help clear backlogs tied to oil-for-loan agreements with foreign creditors.
Additionally, stakeholders are calling on the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) to guarantee fair access to crude for all licensed domestic refiners. The agency is also expected to closely monitor allocations and prevent diversion or illegal sales in foreign markets.
While the current policy falls short of earlier demands for crude to be supplied to local refineries at subsidised rates, many believe it is the next best alternative under the government’s deregulation stance.
The message is clear: the Naira-for-Crude scheme must be sustained and properly managed to ensure it benefits the entire country.
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