The Federal Government’s panel on naira-for-crude is set to reconvene on Monday to address the ongoing crisis, which has been exacerbated by the Nigerian National Petroleum Company Limited’s (NNPCL) allocation of large volumes of crude oil to its foreign creditors. The move has sparked fears of a potential fuel price hike, as the Dangote refinery has announced a temporary halt in the sale of petroleum products in naira.
The naira-for-crude policy was introduced to encourage local refining of petroleum products and reduce the country’s reliance on imported fuel. However, the policy has been plagued by challenges, including the NNPCL’s allocation of crude oil to its foreign creditors. This has made it difficult for local refineries, including the Dangote refinery, to access the crude oil they need to produce petroleum products.
The temporary halt in the sale of petroleum products in naira by the Dangote refinery has sparked fears of a potential fuel price hike. The refinery’s decision was announced on Wednesday, citing the need to avoid a mismatch between its sales proceeds and crude oil purchase obligations, which are denominated in US dollars. The move has already led to an increase in fuel prices at private depots in Lagos, with the cost of loading petrol jumping to around N900/litre.
The FG panel’s reconvening on Monday is aimed at addressing the challenges facing the naira-for-crude policy and finding a lasting solution to the crisis. The panel, which comprises representatives from the Federal Ministry of Finance, the Federal Ministry of Petroleum Resources, and other stakeholders, is expected to review options for resolving the crisis. According to sources, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has been mandated to come up with options that will be reviewed by the panel.
The Petroleum Products Retail Outlet Owners Association of Nigeria (PETROAN) has expressed concern over the potential impact of the crisis on fuel prices. The association’s National President, Billy Gillis-Harry, appealed to the Federal Government to maintain the naira-for-crude deal, citing the potential consequences of a fuel price hike on the masses. “The masses today are happy with the drop in petrol prices. But just a few hours later, the private depot owners started reacting to the Dangote press release by reviewing their prices upward,” Gillis-Harry said.
The NNPCL has maintained its stance on supplying crude for local refining based on mutually agreed terms and conditions. According to the corporation’s spokesman, Olufemi Soneye, the NNPCL remains committed to supplying crude for local refining, but the collective production of local refining companies is less than 50% of the national consumption.
The FG panel’s reconvening on Monday is a welcome development, as it offers a glimmer of hope for resolving the naira-for-crude crisis. However, the potential consequences of a fuel price hike on the masses cannot be overstated. It is essential for the panel to find a lasting solution to the crisis, one that balances the interests of all stakeholders and ensures the stability of the petroleum products market.
