March 30, (THEWILL) – Many Nigerians face daunting social and economic challenges against the backdrop of renewed importation of petroleum products in the country, about six months after the practice was officially suspended.
Lately, there were concerns about the far-reaching impact on the nation’s foreign reserves which would ultimately push the naira into deeper depreciation and stoke inflation.
There are also fears that the development may worsen the socio-economic situation in the country, which has exposed the majority of Nigerians to severe hardship due to the sudden removal of fuel subsidy and devaluation of the naira in June 2023.
However, the recent increase in the importation of refined petroleum products is set to alter the trend and also push the economy into the twin quagmire of high exchange rate and hike in petroleum products.
THEWILL’s analyses of available data by the Nigerian Ports Authority on Thursday, March 20, shows that seven vessels carrying imported petrol, were billed to berth at seaports along the nation’s borders between Monday, March 17, and Sunday, March 23.
These vessels carrying 115,000 metric tonnes of petrol, representing 154.22 million litres of petrol would bring in products through three seaports to improve fuel supply nationwide: Tincan Port in Lagos, the Lekki Deep Seaport, also in Lagos and the Calabar Port in Cross River State.
This comes amidst the suspension of the naira-based crude supply deal between NNPC and local refiners, including Dangote Petroleum Refinery.
Domestic crude oil refiners have accused the authorities of halting the naira-based crude supply deal to frustrate the Dangote Refinery and bring back the full importation of refined petroleum products which put the Nigerian economy in a great peril.
The National Publicity Secretary of the Crude Oil Refinery-owners Association of Nigeria, Eche Idoko, disclosed that suspending the deal defeats the efforts of all stakeholders to achieve energy security in the country.
He accused those behind the unending bid for importation of petroleum products of attacking Dangote by alluding to him as a tough-minded and monopolistic entrepreneur in order to trigger an easy return to importation of the commodity.
Some stakeholders have pointed out that importation of refined petroleum products has continued scrumptiously with resumed pressure on the naira amid claim of the domestic refineries resuming production.
THEWILL recalls that the Nigerian Midstream and Downstream Petroleum Regulatory Authority recently stated that the country’s three operational refineries contribute less than 50 per cent of the nation’s daily petrol consumption, with the shortfall being filled with imported products. But current trends indicate otherwise.
This newspaper’s further analysis of the NPA data revealed that the Dangote Refinery imported 654,766 metric tonnes of crude oil recently.
The first shipment carrying 20,000 metric tonnes of PMS allocated to the West African Port Services berthed at the Dangote terminal on Monday, March 17, 2025. On the same day, two vessels conveying 20,000 metric tonnes, respectively berthed at the Tincan and Calabar seaports.
This was followed by the arrival of a 20,000 metric-tonne Watson vessel on Thursday, March 20. It berthed at the Ecomarine terminal and was handled by a Kach maritime agent.
Similarly, a Binta Saleh ship was scheduled to berth at the Tincan port in Lagos carrying 5,000 metric tonnes of imported petrol on Friday, March 21 at midnight.
On Saturday, March 22, another vessel carrying 15,000 metric tonnes of fuel was billed to berth at Calabar port.
At the same port, a vessel carrying 15,000 metric tonnes of fuel will arrive at the Eco marine terminal today (Sunday) at 5:10 pm. This means that the seven vessels should bring in 115,000 metric tonnes. These constitute about 154.22 million litres of petrol.
“We are back to square one, Nigerians should be prepared for a hike in petroleum products, especially petrol, and a rapid depreciation of the naira,” said Mike Alilionu, a petroleum product transporter.
Alilionu told THEWILL that the temporary relief seen in the lower pump price of petrol and the stable naira in the forex market is over. He noted that there will soon be a mad rush for dollars as marketers’ resort to imported petroleum products to meet domestic consumption requirements.
The Nigeria Bureau of Statistic, NBS stated in its February 2025 report that headline inflation has declined for two consecutive months, namely January and February, from 24.48% to 23.18%, respectively.
This decline, it explained, was partly owing to a change in the base year used for inflation measurement, even as it stated that there was a remarkable decline in price increases, compared to the same period in 2024.
Nevertheless, the picture painted by the NBS gets clearer when its latest Consumer Price Index, CPI, is considered. It shows the high cost of basic commodities across the country despite a drop in inflation.
Using three states in the country for its CPI analysis, the NBS noted that Edo, Enugu, and Sokoto, recorded high inflation rates.
“Edo recorded 33.59 per cent, then Enugu at 30.72 per cent and Sokoto at 30.19 per cent. This indicates that despite the general moderation in inflation nationwide, price pressures remain intense in these states.
“On a month-on-month basis, Sokoto recorded the highest inflation increase at 11.98 per cent, followed by Kogi at 11.38 per cent and Edo at 8.87 per cent, suggesting that prices in these states are still rising at a rapid pace.
“The rise in inflation in these regions has been attributed to high food prices, increased transportation costs and supply chain disruptions.”
According to the NBS, food expenses now account for a staggering 54.9 percent of personal incomes. It has been reported that the twin reform derivatives further dealt a huge blow on Nigerians, many of whom are falling into the category of the 133 million people or 63 percent of persons classified as multi-dimensionally poor in 2022, according to the National Bureau of Statistics (NBS).
After decades of total reliance on imported petroleum products, the Nigerian National Petroleum Company Limited (NNPC) in November 2024, announced that it had finally ended the age-long practice.
The NNPC’s group Chief Executive Officer (GCEO), Mele Kyari, had said at the 42nd Nigerian Association of Petroleum Explorationists (NAPE) Annual International Conference and Exhibition in Lagos, that the national oil company is now off-taking fuel from the Dangote Petroleum Refinery and other local refineries.
Although NNPC thereafter denied the claim, the same Mele Kyari later told the Speaker of the House of Representatives, Tajudeen Abbas, that going by the improvement in local production at the Dangote Petroleum Refinery and the revival of the nation’s four refineries, the country would end the importation of refined petroleum products in December 2024.
Kyari’s optimism, which was also shared among other stakeholders, followed the NNPC’s naira-for-crude agreement with Dangote Petroleum Refinery in 2024.
Under the arrangement, the NNPC was expected to supply crude oil to Dangote Refinery in exchange for refined products, which would then be distributed across the country to stabilise the fuel market.
According to NNPC, the development is expected to save Nigeria as much as $10 billion in hard currency in-country annually, as the national oil company said it now buys from the 650,000 barrels per day Dangote Petroleum Refinery located in Lagos.
The naira-based crude supply arrangement was greeted with a huge sigh of relief among Nigerians who had borne the burden of high price of petroleum products amid the volatility in exchange rate. The devaluation of the naira in June 2023 worsened the situation and put the citizens under immense pressure with inflation shooting for the sky.
Although the naira-for-crude initiative generated mixed reactions, many industry experts had predicted a bright future for Nigeria’s energy sector as Dangote Petroleum Refinery was considered capable of meeting the country’s huge domestic supply.
Among prominent Nigerians who applauded the deal was the Nigeria Governors Forum (NGF) which backed President Bola Tinubu’s crude oil-for-naira initiative, expressing deep frustration over Nigeria’s continuous reliance on imported petrol rather than bolstering local refining capacity to cut back on humongous funds spent on importation.
According to the Forum, it is highly disturbing for an Organisation of Petroleum Exporting Countries (OPEC) member to rely heavily on products shipped into the country, describing it as an “aberration.”
The governors’ position was inspired by Aliko Dangote’s earlier announcement that his refinery could supply over 500 million litres of Premium Motor Spirit (PMS), also known as petrol, but that the NNPC and other retailers were allegedly boycotting the available products.
Dangote claimed that the refusal to off take his petrol was responsible for the petrol queues snaking around many petrol filling stations across the country and resulting in huge financial losses for his company. It was therefore a cause for concern when Dangote Refinery announced the halt of the naira-based crude supply.
When Dangote announced the halt in naira-based crude supply recently, it became obvious that the nation would inevitably return to the days of total importation of petroleum products which would also disrupt the relative stability recorded in the forex market in recent times.
The Federal Government had said that the lull in importation of petroleum products contributed to the stability of the naira in the past three months, resulting in the convergence of the official and parallel markets at N1,500/$1 reported on February 20, 2025.
The Naira has shown relative stability since February, 2025. Last Friday’s session saw the naira close at N1,550/$1 in the parallel market, against N1,580/$1 on the previous Friday, following improved liquidity.
The local currency closed flat at NAFEM, recording N1,536.82/$1, compared to N1,536.89 on the previous Friday, according to data from Coronation Bank.
THEWILL investigation shows that concerns are being raised about the impact of the naira-based crude supply halt amid increase in dollar demand. Bureau De Change (BDC) operators are said to be struggling with a shortage of foreign exchange amid dwindling foreign exchange inflow.
The Federal Government stated its goal to increase that significantly by about 1 million barrels per day in the next two years, but oil theft and pipeline vandalism make such an optimistic objective almost impossible to achieve and casting a bleak outlook on the naira.
However, the naira’s relative stability in the first quarter helped the recent decline of the inflation rate. NBS data revealed that the inflation rate moderated to 23.18 per cent in February from 24.48 per cent in January, marking the first slowdown in 2025.
Lower energy prices, a stable naira, and the rebasing of Nigeria’s inflation index all contributed to the decline impacting on the stability of the naira which some economic experts see as a temporary trend.
Bismarck Rewane, the managing director and chief executive officer of Financial Derivatives Company (FDC) has warned policymakers not to throw caution to the wind as a result of the recent stability of the naira that has become more predictable.
The economist stated that the quick appreciation of the naira is “temporary” and should be treated with caution, advising Nigerian policymakers not to be “carried away”.
“We’re seeing that the naira is strengthening but with caution. Let’s not be too hasty because it’s going to correct itself,” Rewane said at a national television presentation recently.
“There are many things that are happening: reserves of over $40 billion are coming down. We’ve also borrowed $4 billion in bond issues.
“When you look at all of that, we’ve almost spent $8 billion to support the naira at the current levels,” he revealed
However, the apparent end to the naira-based crude supply is seen triggering a rush for dollars among petroleum marketers and other stakeholders, who now face the prospect of purchasing products in U.S. dollars.
With the deal now coming to an end, there are fears that if local refineries, including Dangote, are forced to source crude in dollars, production costs could rise significantly. This shift could put additional pressure on the naira and ultimately lead to an increase in petrol pump prices.
Already, depot owners have continued to effect an increase in the loading cost of petrol and other refined petroleum products at their depots.
As at Thursday, March 20, Rainoil Depot increased its price from N835 to N860 per litre, and MEN depot effected an increase to N860 per litre despite not making sales the previous day.
Pinnacle Depot made a similar price change from N835 to N860 per litre, while Aiteo and Nipco changed their prices to N856 and N860 per litre, respectively, from N835.
The trend points to imminent renewed pressure on the naira as the country grapples with the failure of NNPC in meeting the demands of local refineries following the national oil company’s claims that it has already committed its crude to forward supplies up to 2030.
With another election season in the corner and governance shut down in the third quarter of the year when parties would be organising National Convention in preparation for full blown political activities in 2026, finance and economy experts predict that the naira could hit N2,000/$1 by next year amid demand surge, financing Nigeria’s N13 trillion budget deficits, servicing the nation’s N142 trillion debt stock and, now, importation of petroleum products.
The twin effects of petrol price hike and further depreciation of the naira would impact seriously on the standard of living of the average Nigerian as it will trigger inflation. Analysts at Afrnvest had urged Nigerians to brace for impacts of the government’s reform policies and their fallouts.
Nigeria is in for a fresh foreign exchange crisis as the country gradually returns to increased importation of petroleum products which it had assured the world was over.
At the commissioning of Dangote Petroleum Refinery by former President Muhammadu Buhari in May 2023, Kyari had announced that NNPC would supply Dangote with 300,000 barrels of crude daily to ensure the smooth operations of the facility. Industry experts at the time questioned how NNPC would source the crude given the epileptic supply that had characterized its production culture.
The naira-for-crude deal appeared a move to strengthen the pledge in what looked like an exercise in exceptional patriotism. But Dangote announced the end of the deal on the ground that NNPC had not fulfilled its part of the bargain by supplying it with the required feedstock.
According to NNPC, its default stemmed from shortage of crude as it had many forward commitments.
NNPC has been unable to meet its crude oil supply obligations to local refineries due to its focus on servicing oil-backed loans. These loans which are tied to future crude oil productions have taken precedence over domestic commitments, leaving Dangote and other local refiners scrambling for supply.
There is simply not enough crude to go round for the interest of local refineries, and this is not likely to change any time soon as some of the crude-backed obligations last till 2030.
THEWILL recalls that in August 2023, NNPC secured an emergency crude repayment loan of $3.3 billion from the African Export-Import Bank (Afreximbank), aimed at supporting the naira and stabilizing the foreign exchange (FX) market. The five-year tenor facility had an interest rate of 11.85 percent.
In the statement entitled, ‘Temporary Suspension of Sales of Petroleum Products in Naira,’ the management of Dangote Petroleum Refinery explained that the decision was necessary to align its sales currency with the crude procurement currency.
“To date, our sales of petroleum products in naira have exceeded the value of naira-denominated crude we have received. As a result, we must temporarily adjust our sales currency to align with our crude procurement currency,” the statement read.
The firm, however, assured that sales would resume in naira as soon as it receives crude supply in naira from the NNPC Limited. This is not likely to happen in the near future.
