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NNPC Ends Naira-for-Crude Cope with Dangote Refinery, Different Native Producers
The Nigerian Nationwide Petroleum Firm (NNPC) Restricted has discontinued its naira-for-crude association with Dangote Petroleum Refinery and different native refineries, a choice that would improve petrol pump costs nationwide.
Influence on Native Refining and Petrol Costs
The suspension of the naira-based crude provide means native refiners, together with Dangote Refinery, will now must supply crude from worldwide suppliers, incurring greater prices in {dollars}. This improvement raises issues over potential hikes in petrol costs and elevated volatility within the overseas trade (FX) market.
Trade sources reveal that regardless of efforts to spice up home refining capability, Nigeria has nonetheless spent over $4.3 billion importing 6.38 billion litres of petrol and diesel in simply 5 months.
NNPC Ahead-Sells Crude Till 2030
In accordance with high-level sources, NNPC knowledgeable native refiners that it has forward-sold all its crude provides till 2030. This transfer successfully halts the naira-for-crude coverage, which was launched in October 2024 as a method to enhance native provide and scale back the price of petroleum merchandise.
Challenges with the Crude-for-Naira Initiative
The federal govt council (FEC) initially accepted the sale of 450,000 barrels of crude in naira for home refining, with Dangote Refinery performing as a pilot undertaking. The NNPC was supposed to provide at the very least 385,000 barrels per day (bpd) to Dangote, however experiences point out it failed to satisfy this dedication.
In November 2024, Edwin Devakumar, Vice-President of Dangote Industries Restricted (DIL), criticized the NNPC’s provide as inconsistent and insufficient, calling it “peanuts” in comparison with the refinery’s 650,000 bpd requirement.
Unsure Future for Nigeria’s Gasoline Provide
With the NNPC nonetheless importing petroleum merchandise, the discontinuation of the naira-based crude provide raises fears of upper gas costs and elevated dependence on overseas markets.
Whereas Dangote Refinery has declined to remark formally, insiders counsel the corporate is reviewing its choices in response to this sudden shift in coverage.
In the meantime, business analysts warn that the choice may erode current features within the foreign exchange market and worsen the financial pressure on Nigerians.
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