Nigerians may soon see petrol prices drop as the Federal Government reinstates the initiative allowing the Dangote Refinery to sell Premium Motor Spirit (PMS), commonly known as petrol, in naira. The restoration of the crude and refined product sales in naira aims to bolster local refining capacity and reduce reliance on foreign exchange in the domestic petroleum market.
The Federal Ministry of Finance announced the initiative’s revival on its X (formerly Twitter) handle, stating that the Technical Sub-Committee on the Crude and Refined Product Sales in Naira held an update meeting on Tuesday to assess progress and resolve implementation issues. The meeting included key figures such as Finance Minister Wale Edun, FIRS Executive Chairman Zacch Adedeji, NNPCL Chief Financial Officer Dapo Segun, and representatives from Dangote Petroleum Refinery and Petrochemicals, as well as senior officials from various regulatory bodies and financial institutions.
The ministry emphasized that the initiative is not a temporary measure but a key policy designed to support sustainable local refining, enhance energy security, and reduce dependence on foreign exchange in the domestic petroleum market. The committee acknowledged potential implementation challenges but assured that coordinated efforts among all parties are actively addressing such issues.
Introduced in October 2024, the naira-for-crude deal enables domestic refiners to purchase crude oil in naira instead of foreign currencies. However, the deal faced a setback earlier this year, leading to concerns about its future. One reason cited for the suspension was the commitment of crude oil production to prior forward contracts, preventing NNPCL from fully adhering to the naira-for-crude framework.
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Dangote Refinery disclosed that its naira sales had already exceeded the value of locally-denominated crude oil received, making it necessary to switch to dollar-based sales. Following the suspension in March, Dangote ceased selling refined petroleum products in naira, raising fears of potential increases in fuel prices. The refinery was then forced to revert to sourcing crude oil in foreign currencies, driving up the cost of refined products.
The restoration of the naira-for-crude deal is expected to alleviate pressure on Nigeria's foreign exchange reserves and potentially stabilize the naira against the dollar.
The policy is designed to support local refineries like NNPC's refineries and Dangote Refinery, ensuring that crude oil transactions can occur in naira, thus supporting efforts to enhance domestic refining capacity and reduce reliance on foreign currency for the importation of petroleum products.
Zacch Adedeji emphasized that the naira-for-crude arrangement remains in place, with the government fully committed to its goals of enhancing local refining capacity and reducing reliance on foreign currency.