The Nigerian energy sector is bracing for a potential crisis as Dangote Refinery, one of the country's major petroleum products suppliers, has halted the sale of petrol in Naira and is considering selling the product in US dollars. This move is a direct response to the Nigerian National Petroleum Company's (NNPC) decision to discontinue its Naira-for-Crude program, which allowed local refineries to purchase crude oil in Naira.

The Naira-for-Crude initiative was introduced to support local refineries and reduce the country's dependence on imported petroleum products. However, the NNPC has claimed that it has forward-sold all its petroleum output, effectively ending the program. This has created an imbalance in sales proceeds and crude oil purchase obligations for Dangote Refinery, prompting the company to explore alternative sales currencies.

In a statement, Dangote Refinery explained that its sales of petroleum products in Naira have exceeded the value of Naira-denominated crude it has received, necessitating a temporary adjustment in sales currency to align with its crude procurement currency. The refinery has denied rumors that the interruption in petrol sale was due to a ticketing fraud incident.

Experts warn that this new development could lead to a surge in demand for US dollars in Nigeria's foreign exchange market, as petroleum marketers and other stakeholders may need to pay for goods in USD. This could, in turn, trigger another fuel scarcity saga and potentially hike petrol prices, which had been on a downward trajectory since late last year.

Fuel prices in Nigeria have dropped significantly, from N1,200 to N825, due to price cuts initiated by Dangote Refinery. However, these gains could be reversed if the NNPC refuses to continue its sale of crude to local refineries in Naira. The Nigerian government will need to intervene to resolve the Naira-for-Crude deal and prevent a potential fuel crisis.

The Dangote Refinery has had access to 48 million barrels of crude oil since the Naira-for-Crude deal was signed in October 2024. The refinery has promised to resume sales in Naira once it receives its supply of oil in Naira from NNPC Limited. The situation highlights the need for a stable and sustainable energy policy in Nigeria to avoid recurrent crises in the sector.

The implications of this development extend beyond the energy sector, as a potential fuel crisis could have far-reaching consequences for the Nigerian economy. The government must act swiftly to address the issue and prevent a potential crisis.