Dangote Refinery Halts Naira Sales Despite NNPC’s Denial of Naira-for-Crude Contract Cancellation

Dangote Petroleum Refinery has temporarily halted the sale of petroleum products in naira, citing challenges in balancing crude oil purchase obligations with sales proceeds. This decision comes amid growing uncertainty over the future of its naira-for-crude agreement with the Nigerian National Petroleum Company Limited (NNPC), set to expire at the end of March 2025.

Dangote Refinery explained that the volume of petroleum products sold in naira has exceeded the naira-denominated value of crude oil received. As a result, the refinery has been compelled to prioritise transactions in foreign currency to meet procurement obligations.

The suspension has fueled speculation about the fate of the naira-for-crude deal, which was introduced in October 2024 to enhance local refining and stabilize fuel prices. Under the agreement, NNPC has supplied over 48 million barrels of crude oil to Dangote Refinery, with total deliveries exceeding 84 million barrels since the refinery began operations in 2023.

While the NNPC had denied claims of terminating the naira-based crude supply arrangement, concerns persist over potential fuel price hikes if a new deal is not secured. Some concerns has been raised that disruptions in domestic fuel supply could create inflationary pressures, particularly if Dangote Refinery shifts its transactions entirely to dollar-based payments.

The refinery’s presence in the global market is already reshaping fuel trade dynamics, reducing Africa’s reliance on European imports and impacting European refiners’ profit margins.

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