Nigeria Faces Another Petrol Price Surge as Naira-For-Crude Negotiations Collapse

The six-month agreement, which began in October 2024, is set to expire today, Monday, March 31, 2024, and the parties have yet to finalize whether it will be extended or discontinued. The uncertainty surrounding the deal has directly impacted fuel prices, with a significant rise in petrol costs. Dealers have attributed the surge to the government’s failure to extend the deal, which had previously played a crucial role in stabilizing fuel prices.

In just one week, petrol prices have increased from around ₦860 per litre to over ₦930 per litre, with projections suggesting prices could reach ₦1,000 per litre if the deal is not renewed.

Compounding the situation, industry sources have revealed that the Dangote refinery, which processes 650,000 barrels of crude oil per day, is scheduled to shut down its petrol-producing unit for maintenance in June. The 30-day maintenance is expected to exacerbate Nigeria’s petrol supply challenges.

An insider at the Ministry of Finance, familiar with the ongoing negotiations, disclosed to Punch that no significant progress had been made on extending the naira-for-crude deal. “Nothing new has happened. Probably after the holidays, the committee will sit and meet,” the source expressed, highlighting frustration over the lack of resolution.

The naira-for-crude deal, implemented on October 1, 2024, was intended to enhance supply, reduce Nigeria’s reliance on expensive petroleum imports, and bring down pump prices. However, its suspension has led to disruptions, including the sharp rise in petrol prices.

On March 19, 2025, the Dangote refinery temporarily halted the sale of petroleum products in naira, citing a mismatch between the naira-denominated sales proceeds and its crude oil purchase obligations, which are denominated in US dollars. This shift in sales currency caused petrol prices at private depots in Lagos to surge to around ₦900 per litre, from under ₦850 previously. Retail stations across the country quickly followed suit, with prices reaching ₦930 in Lagos, ₦950 in Abuja, and ₦960 in northern Nigeria.

The situation has raised widespread concern among industry stakeholders, who are urging an urgent resolution of the deadlock. Chinedu Ukadike, the National Publicity Secretary of the Independent Petroleum Marketers Association of Nigeria (IPMAN), expressed frustration with the ongoing issue, stating, “We’ve called for a stakeholders meeting. We are going to meet to discuss it and come out with a way forward.”

The meeting, originally scheduled for this week, has been postponed to May 1, 2025, due to the Sallah and Easter breaks. Ukadike also noted that the price fluctuations over the past six months have resulted in losses exceeding ₦200 billion for marketers, with many bulk buyers now discouraged from participating in the volatile market.

Dealers have placed the blame squarely on the Federal Government for the ongoing price hikes, arguing that the government’s failure to extend the naira-for-crude deal has contributed to the current crisis, leaving many marketers struggling to cope with the unpredictable pricing environment.