Nigeria's government has revived its naira-for-crude initiative, a move expected to benefit local refineries, including the Dangote Refinery, and boost the country's energy production. The Federal Ministry of Finance announced the reinstatement of the Crude and Refined Product Sales in Naira initiative, which allows local refiners to purchase crude oil using the naira instead of foreign currency.

The policy, initially suspended, is being reinstated as part of broader efforts to support local energy production, conserve foreign reserves, and stabilize the country's refining capacity. The Technical Sub-Committee on the Crude and Refined Product Sales in Naira Initiative reaffirmed the government's commitment to the policy, stating it is a long-term strategy rather than a temporary response to industry disruptions.

The halt of the naira-for-crude initiative had significantly impacted the oil industry, exacerbating existing challenges and hindering progress toward energy security and refining self-sufficiency. The suspension led to increased reliance on foreign currency, higher operational costs for local refineries, stunted growth of local refining capacity, fuel supply disruptions, and increased pressure on the government.

The Dangote Refinery, one of Africa's largest refineries, was particularly affected by the suspension. The refinery had to temporarily suspend petrol sales in naira due to a misalignment between revenue and crude oil purchase obligations, which are settled in U.S. dollars. The Nigerian National Petroleum Corporation (NNPC) stopped selling crude oil to Dangote Refinery in naira, citing the end of their six-month agreement from October 2024 to March 2025.

The reinstatement of the naira-for-crude initiative is expected to have a positive impact on fuel prices, as local refineries will once again have access to discounted crude oil. This cost advantage will enable refineries to lower fuel prices, reducing competitive pressure on the Nigerian National Petroleum Company (NNPC) and potentially leading to a broader decrease in pump prices nationwide.

The move is seen as a strategic step towards achieving energy security and refining self-sufficiency in Nigeria. By supporting local refineries and promoting the use of the naira, the government aims to reduce the country's reliance on foreign exchange and stabilize the domestic petroleum market.

The revival of the naira-for-crude initiative is a significant development in Nigeria's energy sector, and its implications will be closely watched by industry stakeholders and observers. As the country continues to navigate the challenges of energy production and refining, this policy is expected to play a crucial role in shaping the sector's future.