The Federal Government, Nigerian National Petroleum Company Limited (NNPC), and Dangote Petroleum Refinery are set to resume discussions on the naira-for-crude arrangement following the expiration of the initial agreement on March 31, 2025.
The policy allowed NNPC to supply crude oil to Dangote Refinery with payments settled in naira instead of foreign currency. It was introduced in October 2024 to address foreign exchange pressures, stabilize fuel prices, and reduce reliance on imported refined products.
NNPC data shows that Dangote Refinery received 48 million barrels of crude oil under the agreement. This accounted for part of the 84 million barrels delivered to the refinery since it commenced operations.
Since the expiration of the arrangement, Dangote Refinery has partially shifted to international crude imports.
According to S&P Global, the refinery processed an average of 400,000 barrels per day (bpd) in the first quarter of 2025 whille about 35 percent or 140,000 bpd of the processed volume was sourced from international suppliers.
The refinery recently secured its first cargoes from Brazil and Equatorial Guinea to offset supply shortfalls from local sources. Industry data also shows that the refinery has been actively diversifying its feedstock portfolio amid volatility in domestic crude supply.
A senior government official confirmed that discussions regarding the continuation of the policy are ongoing. The committee responsible for the review is awaiting input from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) before making further recommendations.
Despite operational challenges, particularly with pricing under the naira settlement structure, government officials maintain that the policy supported macroeconomic stability.
It contributed to moderating inflation and improving foreign exchange liquidity during the initial phase.
NNPC, however, struggled to meet its supply commitments under the arrangement. The company had pledged to supply 385,000 bpd but consistently fell short. NNPC’s equity in the Dangote project was also reduced from 20 percent to 7.2 percent in 2024, further complicating its participation in the arrangement.
Dangote Refinery executives have expressed concerns about the commercial impact of the naira settlement structure. They highlighted exposure to foreign exchange risks and unfavorable pricing adjustments linked to global crude benchmarks.
Negotiations are expected to address these concerns as the parties evaluate the possibility of extending or modifying the framework.
Meanwhile, the Human Rights Writers Association of Nigeria (HURIWA) has urged the Federal Government to sustain the policy. The group argued that ending the arrangement could worsen inflation and increase pump prices, further burdening Nigerian households.
NNPC has allocated seven cargoes, estimated at 245,000 bpd, for delivery to the Dangote Refinery in April. However, payment terms are still under negotiation.
The Federal Government is expected to provide clarity on the future of the naira-for-crude arrangement once the regulatory review is concluded.
