Fuel Prices Set To Rise As Naira-for-Crude Agreement Stalls

Operators in Nigeria’s downstream oil and gas sector are anxiously awaiting the Federal Government’s decision on the naira-for-crude agreement between the Nigerian National Petroleum Company Limited (NNPCL) and the Dangote Petroleum Refinery as the deal officially expires today, March 31, 2025.

The six-month agreement, which began in October 2024, was aimed at stabilizing fuel supply, saving foreign exchange, and controlling petrol prices. However, discussions on extending or terminating the deal remain inconclusive, causing uncertainty and fuel price hikes across the country.

Fuel Prices Rise as Naira-for-Crude Talks Stall

Within a week, petrol prices have jumped from N860 per liter to over N930 per liter, with marketers warning that prices could surpass N1,000 per liter if the deal is not renewed.

The Dangote refinery, which processes 650,000 barrels per day, is also set to shut down its petrol-producing unit for maintenance in June, a move that could further worsen fuel supply challenges.

Dangote Suspends Naira-Denominated Fuel Sales

On March 19, 2025, the Dangote Refinery announced a temporary halt to petroleum product sales in naira, citing a currency mismatch between its sales revenue (in naira) and its crude oil procurement obligations (in US dollars).

“Our sales of petroleum products in naira have exceeded the value of naira-denominated crude received. To align with our crude procurement currency, we must temporarily adjust our sales currency,” the refinery stated.

Following this announcement, private depot prices in Lagos surged from N850 to N900 per liter, while pump prices reached N930 in Lagos, N950 in Abuja, and N960 in the North.

Industry Stakeholders Call for Urgent Intervention

Oil marketers blame the Federal Government for failing to renew the deal, which they argue has exacerbated fuel price volatility.

“We’ve called for a stakeholders’ meeting to address this crisis. Selling crude oil in naira was a critical policy, and any deviation affects us all,” said Chinedu Ukadike, National Publicity Secretary of the Independent Petroleum Marketers Association of Nigeria (IPMAN).

The meeting, initially scheduled for March, was postponed to May 1, 2025, due to the Eid-el-Fitr and Easter holidays. It will include representatives from IPMAN, the *Petroleum Products Retail Outlets Owners Association of Nigeria, and other key industry players.

Petrol Prices Could Hit N1,000 Per Liter

IPMAN Vice President, Hammed Fashola, expressed concerns that petrol prices could exceed N1,000 per liter if the naira-for-crude arrangement isn’t reinstated.

“The Federal Government must act swiftly. The economic burden of dollar-based fuel pricing is unsustainable for Nigerians,” Fashola warned.

Meanwhile, Dangote refinery reportedly faced pressure from major distributors such as MRS, Heyden, and Ardova, leading to an increase in petrol prices over the Eid-el-Fitr weekend.

With no clear resolution in sight, the ongoing uncertainty threatens higher fuel prices, increased transportation costs, and greater economic strain on Nigerians.