The Crude Oil Refiners Association of Nigeria (CORAN) has called on federal government to renew and expand the naira-crude initiative as the initial arrangement expires this March.
The Association said that after careful review of the policy it was considered a huge success as it helped to strengthen the naira and crashed the price of Premium Motor Spirit (PMS) also called petrol.
Speaking to LEADERSHIP on the initiative, spokesman of CORAN, Eche Idoko, said when the initiative was muted it was resolved that it will go through a trial period to end by March this year.
The idea is to assess the impact and then if the outcome is positive it will be extended to other refineries.
Idoko, informed that initial arrangement is to supply crude to Dangote refinery on the understanding that it will reduce pressure on naira and ensure optimal performance of the refinery and make product available and affordable.
He said that the suspension of the policy by the Nigerian National Petroleum Company (NNPC) Limited is in line with the original conception of the initiative.
He said the decision is not expected to create any anxiety because there is an understanding of renewable based on the impact which CORAN confirms has helped in stabilising the domestic market.
The naira-for-crude arrangement, introduced on October 1 2024, allowed local refiners to purchase crude oil in naira instead of dollars. The initiative was designed to support domestic refining capacity, reduce reliance on imported petroleum products, and stabilize the local currency by easing pressure on foreign exchange reserves.
However, industry experts says the termination of the agreement means that Nigerian refineries, including the much-anticipated Dangote facility, will now have to source crude oil from international suppliers, paying in dollars instead of naira.
This shift is expected to escalate operational costs, potentially leading to higher fuel prices at the pump.
According to credible sources familiar with the development, the NNPC informed local refiners that it has already committed its crude oil production to forward contracts, leaving no supply available for domestic refineries.
This revelation comes despite reports that Nigeria’s crude output has increased since the deal first began.
The suspension has raised concerns among industry stakeholders, particularly for the Dangote Refinery, which is poised to become one of Africa’s largest refining facilities.
The refinery, owned by billionaire Aliko Dangote, has been a key beneficiary of the naira-for-crude deal, as it relies on locally sourced crude to meet its refining needs. Analysts fear the suspension could delay the refinery’s operational timeline and increase costs.
Other private refiners, including Waltersmith Petroman and BUA Refinery, are also expected to feel the impact. The deal had provided them with a cost-effective way to secure crude oil feedstock, enabling them to compete with international players.
Economists have warned that the suspension could have ripple effects on Nigeria’s economy. The naira has already faced significant pressure in recent months, and the removal of this dollar-saving mechanism could exacerbate the currency’s volatility.
Additionally, the move may hinder efforts to achieve self-sufficiency in petroleum production, a key goal of the federal government.
