Nigeria's Fuel Future Hangs In The Balance Amid Uncertainty

What’s Next for Nigeria’s Fuel Sector?

As we sit here on the brink of a pivotal moment in Nigeria’s fuel landscape, operators in the downstream oil and gas sector are holding their breath. All eyes are on the Federal Government, waiting anxiously to see what decision they’ll make regarding the naira-for-crude deal between the Nigerian National Petroleum Company Limited (NNPCL) and the Dangote Petroleum Refinery. This deal, which has been a lifeline for stabilizing fuel prices, officially wraps up today, Monday, March 31, 2024. But here’s the catch—no one knows if it’s going to be renewed or if it’s coming to an end.

The Countdown to March 31

Let’s break this down. The six-month agreement began back in October 2024, and now that we’re at the finish line, there’s still no clarity on what’s next. It’s like watching a clock tick down without knowing whether it’s going to strike midnight or reset. This lack of resolution has already begun to ripple through the market, sending shockwaves that are being felt by both dealers and consumers alike. The uncertainty is palpable, and it’s not just numbers on a screen—it’s affecting real people’s lives.

Rising Prices: A Wake-Up Call

Here’s the reality check: petrol prices are skyrocketing. In just one week, we’ve seen prices jump from around ₦860 per litre to over ₦930 per litre. And if you think that’s bad, brace yourself—experts are warning that prices could soar to ₦1,000 per litre if the deal isn’t revived. Dealers are pointing their fingers at the government, blaming the failure to extend the naira-for-crude deal for this surge. Without the deal, the stability that was once a glimmer of hope is now slipping through our fingers.

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Dangote Refinery: A Temporary Halt

Adding fuel to the fire—or should I say, adding strain to an already fragile system—is the upcoming maintenance at the Dangote refinery. This powerhouse, which churns out 650,000 barrels of crude oil per day, is set to shut down its petrol-producing unit for 30 days starting in June. Now, imagine the domino effect this will have on Nigeria’s petrol supply. With the refinery offline for a month, the nation could face even greater shortages, further driving up prices and leaving consumers to bear the brunt.

Behind the Scenes: The Negotiation Standstill

Meanwhile, behind closed doors, negotiations are—or rather, aren’t—happening. An insider from the Ministry of Finance, speaking to Punch, revealed that progress on extending the naira-for-crude deal has been painfully slow. “Nothing new has happened. Probably after the holidays, the committee will sit and meet,” the source said, frustration laced in their voice. It’s a waiting game, and every day that passes without a resolution is another day of uncertainty for the industry.

Looking Back: The Promise of the Deal

When the naira-for-crude deal was first introduced on October 1, 2024, it was hailed as a game-changer. The goal was clear: improve supply, reduce reliance on costly petroleum imports, and bring down pump prices. For a while, it worked. But now, with the deal suspended, we’re witnessing the exact opposite—disruptions, skyrocketing prices, and a market teetering on the edge. It’s a stark reminder of just how fragile the balance is when it comes to fuel supply and pricing in Nigeria.

A Temporary Halt, A Bigger Problem

On March 19, 2025, the Dangote refinery dropped a bombshell: they announced a temporary halt to selling petroleum products in naira. Why? Because there’s a mismatch between the naira-denominated sales proceeds and their crude oil purchase obligations, which are in US dollars. “We must temporarily adjust our sales currency to align with our crude procurement currency,” the refinery explained in a statement. This decision sent shockwaves through the market, with petrol prices at private depots in Lagos jumping to about ₦900 per litre, up from under ₦850. Retail stations across the country quickly followed suit, pushing prices to ₦930 in Lagos, ₦950 in Abuja, and ₦960 in the north.

The Cry for Resolution

This situation has sparked widespread concern among industry stakeholders, who are urging the government to resolve the deadlock. Chinedu Ukadike, the National Publicity Secretary of the Independent Petroleum Marketers Association of Nigeria (IPMAN), expressed frustration over the issue. “We’ve called for a stakeholders meeting. We are going to meet to discuss it and come out with a way forward,” he stated in a chat with Punch. But here’s the kicker—the meeting, initially scheduled for this week, has been postponed to May 1, 2025, due to the Sallah and Easter breaks. In the meantime, marketers are feeling the pinch, with losses exceeding ₦200 billion over the last six months. Many bulk buyers are hesitant to take on the risks of purchasing and selling at a loss, further complicating the already fragile market.

Who’s to Blame?

Dealers are placing the blame squarely on the Federal Government for the ongoing price hikes. They argue that the government’s failure to extend the naira-for-crude deal has led to this crisis, leaving marketers scrambling to manage the volatile pricing environment. It’s a tough pill to swallow, and the pressure is mounting. As the days tick by without a resolution, the question remains: will Nigeria’s fuel sector find stability, or will it continue to teeter on the edge of chaos? Only time will tell.

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