The Business NG - March 12, 2025

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Today's editorial in BusinessNG examines the Nigerian National Petroleum Company (NNPC) Limited's abrupt termination of the naira-for-crude oil swap deal with local refiners, including the Dangote Refinery. Launched on October 1, 2024, the initiative was intended to enhance domestic refining capacity by allowing refiners to purchase crude oil in naira rather than dollars. This policy aimed to reduce dependency on imported petroleum products and stabilize the naira by alleviating pressure on foreign exchange reserves.

However, the NNPC’s decision to allocate its crude oil production to forward contracts has effectively cut off local refiners from domestic supply, forcing them to rely on international suppliers and make payments in dollars. This shift is expected to increase operational costs and potentially disrupt production, particularly at a time when local refiners are struggling to meet national demand.

Despite the Dangote Refinery’s claim of being able to meet Nigeria’s entire petroleum requirements, reports from the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) reveal that Nigeria’s three main refineries—Dangote, Port Harcourt, and Warri—only managed to meet 50% of the country's demand in February 2025.

As the policy shift takes immediate effect, BusinessNG underscores the urgent need for a balanced approach that supports local refining efforts without undermining the nation’s broader economic goals. The editorial calls for dialogue between the NNPC and domestic refiners to address the challenges arising from this policy change and secure Nigeria’s energy future.