By Sandra Ukeredi
The Nigerian National Petroleum Company Limited (NNPCL) is facing intense criticism for its recent ‘Dollars for Crude’ policy, which has been condemned by the Centre for Energy Development and Economic Sustainability (CEDES) as a deliberate attempt to cripple local refineries and sustain Nigeria’s dependence on fuel imports ¹.
Dr. Umar Sani, Executive Director of CEDES, accused the NNPCL of prioritizing foreign exchange gains over the survival of local refiners. The Naira-for-Crude arrangement had ensured steady crude supply to Nigerian refineries, saved the government huge amounts in foreign exchange, and allowed for reinvestment in critical infrastructure ¹.
The controversy surrounding the policy has sparked concerns among petroleum marketers, who have started adjusting pump prices accordingly. The Independent Petroleum Marketers Association of Nigeria (IPMAN) warned that marketers might begin selling petrol in US dollars if Dangote Refinery insists on foreign currency transactions ¹.
This could lead to higher fuel prices, petrol scarcity, worsening inflation, and further hardship for Nigerians. CEDES warned that the NNPCL’s latest move could have severe consequences for the Nigerian economy and called on the federal government to immediately reverse the policy and uphold the Naira-for-Crude system to support local refining and economic stability ¹.
The decision to stop the naira-based crude supply might lead to volatility in the foreign exchange (FX) market, thereby eroding recent gains, according to market analysts. This could further exacerbate the economic challenges facing Nigeria ¹.
In October 2024, the federal executive council (FEC) approved the allocation of 450,000 barrels of crude intended for domestic consumption to be sold in naira to Nigerian refineries, with the Dangote refinery serving as a pilot project. However, the national oil firm has been accused of consistently failing to meet the allocation ¹.
The Dangote refinery has expressed concerns over the NNPC’s inability to supply adequate crude oil. Edwin Devakumar, the vice-president of Dangote Industries Limited (DIL), described the NNPC’s supply as “peanuts” ¹.
The controversy surrounding the ‘Dollars for Crude’ policy has highlighted the need for a sustainable and stable energy policy in Nigeria. The federal government must carefully consider the implications of this policy and take decisive action to support local refineries and economic stability.
The NNPCL’s move has also raised concerns about the potential impact on the Nigerian economy, particularly in terms of inflation and foreign exchange volatility. As the situation unfolds, Nigerians will be watching closely to see how the government responds to the crisis.
In the meantime, petroleum marketers are bracing themselves for the potential consequences of the policy change. The IPMAN has warned that the move could lead to a shortage of petroleum products, which would have a devastating impact on the economy.
As the debate rages on, one thing is clear: the NNPCL’s ‘Dollars for Crude’ policy has sparked a fierce backlash, and the government must act quickly to address the concerns of stakeholders and mitigate the potential damage to the economy.
Middle-Belt Times 