Nigeria's Naira-for-Crude initiative, which was discontinued last month, is likely to resume, according to senior government sources. The program, which involves selling crude oil to regional refineries in the local currency, was halted due to the Nigerian National Petroleum Company's (NNPC) claim that it had forward-sold all its crude oil. However, the government is now reconsidering the initiative due to its positive impact on fuel prices and economic indices.

A government source, who wished to remain anonymous, revealed that the committee in charge of the Naira-for-Crude deal is awaiting the Nigeria Upstream Petroleum Regulatory Commission's submission on the task given to it regarding the policy. Once that is done, the next step would be to determine the way forward for the Naira-for-Crude policy. The source emphasized that the initiative has had a significant impact on fuel prices and other economic indices, making it a crucial strategy for the government to consider.

However, a Dangote Refinery official expressed doubts about the prospects of a renewed Naira-for-Crude agreement. In an interview with S&P Global, the official stated that the refinery is not certain if the agreement will be renewed or if it will proceed at all. The official cited concerns about the commercial viability of the agreement, which requires the refinery to sell its oil products in naira, exposing it to foreign exchange risks.

The Dangote Refinery has been forced to source crude oil from external markets since the NNPC halted the Naira-for-Crude program, resulting in an increase in fuel prices. The average price of fuel at the Dangote Refinery has risen from N845 to N930, according to reports. The refinery imported around 140,000 barrels of crude oil every day for a three-month total of 12.6 million barrels.

The Naira-for-Crude initiative was initially launched as a six-month agreement between the NNPC and Dangote Petroleum Refinery, with the first part ending on March 31, 2025. The program was seen as a way to reduce the country's reliance on imported fuel and stabilize the economy. However, the NNPC's decision to halt the program has raised concerns about the impact on fuel prices and the economy.

The potential resumption of the Naira-for-Crude initiative comes as Nigeria is grappling with debt sustainability fears, having secured a $632 million World Bank loan. The government is under pressure to find ways to mitigate the impact of fuel price increases on the economy, and the Naira-for-Crude strategy is seen as a key component of this effort.

As the government and stakeholders continue to negotiate the terms of the Naira-for-Crude initiative, the fate of the program remains uncertain. However, one thing is clear: the government is keen to find a solution that will stabilize fuel prices and support the economy, even if it means revisiting a strategy that has been previously discontinued.