Nigeria Naira-for-Crude Deal Begins at Dangote Refinery, Fuel Price Reductions Expected

The Dangote Refinery will begin receiving crude oil in naira from the NNPC starting October 1, 2024. This initiative aims to ease pressure on the naira and ensure a steady petroleum product supply. Modular refineries call for inclusion in the scheme, as Nigerians anticipate potential reductions in petrol prices.

The Dangote Refinery is set to begin receiving crude oil in exchange for naira payments from the Nigerian National Petroleum Company (NNPC) starting October 1, 2024. This is part of a Federal Executive Council initiative aimed at boosting local currency transactions for crude oil. The refinery, located in Lekki, will receive 385,000 barrels per day from NNPC, and in return, it will provide refined petroleum products, such as petrol and diesel, to the local market, all in naira.

The initiative is expected to alleviate pressure on the naira, reduce transaction costs, and ensure a steady supply of petroleum products. However, modular refineries are urging the government to extend this scheme to other local refineries as they struggle with erratic crude supply. Nigerians remain hopeful that this move will reduce the cost of petrol, although the Dangote Group has not yet announced formal pricing.

The Federal Government has confirmed it will not interfere with pricing, given the deregulation of the petroleum sector. Critics and modular refinery owners await clearer communication on how the scheme will work.