The Dangote Petroleum Refinery in Lagos, Africa’s largest privately owned refinery, has signed a new two-year crude supply agreement with the Nigerian National Petroleum Company Limited (NNPC), guaranteeing continued fuel production for the domestic market and enabling transactions in naira following recent suspensions.
The announcement comes just days after the refinery “briefly suspended naira sales in the final week of the month, citing the exhaustion of its local-currency allocation, before reversing the decision following the government’s last-minute intervention,” Business Insider Africa reported.
The suspension raised questions about the sustainability of the naira-for-crude initiative, introduced last year by President Bola Tinubu to stabilize local fuel prices and cut Nigeria’s dependence on imported crude, much of it sourced from the United States.
Andy Odeh, Chief Corporate Communications Officer of NNPC, confirmed that “NNPC Limited has continued to allocate crude oil to Dangote Refinery in naira for the sale of products in the domestic market.”
He added that “the state-owned company and the refinery have negotiated and executed a new Sales and Purchase Agreement, which is set to run until 2027.”
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According to Odeh, “in accordance with this agreement, NNPC Limited, DPRP (Dangote Petroleum Refinery and Petrochemical), and NMDPRA periodically reconcile the volume and cost of products supplied in naira, commensurate with the crude delivered.
NNPC and DPRP concluded negotiations and, in August, signed a new two-year Sales and Purchase Agreement, allocating three naira crude cargoes in August and five cargoes each for September and October 2025.”
He noted that “crude loading operations for August have been completed, while September operations are currently in progress, with two vessels at terminals undergoing pre-loading formalities.
In total, from October 2024 to October 2025, 82 million barrels of crude have been allocated to the refinery, of which 60 per cent (49.3 million barrels) are naira cargoes.”
Ahead of the deal, a steering committee chaired by Finance Minister Wale Edun, and including representatives from the Central Bank, Afreximbank, the Federal Inland Revenue Service, and oil regulators, assured stakeholders that the naira-for-crude initiative would continue without disruption.
The committee emphasized that “the Federal Government remains fully committed to ensuring energy security, protecting consumers, and maintaining stability in the domestic petroleum products market.”
Analysts, however, have warned that the policy could face challenges if crude allocations decline or local-currency payments prove unsustainable amid ongoing naira weakness.
Still, the agreement secures a steady supply for the refinery, owned by Africa’s richest man, Aliko Dangote, which is viewed as pivotal to Nigeria’s energy security.
For now, the deal provides reassurance to markets and consumers while also supporting the country’s foreign exchange stability.
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Image Credit: The ICIR
