There is growing concern in Nigeria’s downstream oil sector following reports that Dangote Refinery may halt the supply of petroleum products for the domestic market. This development comes amid slow progress in the renegotiation of the Naira-for-crude deal between the Nigerian government and Dangote Refinery.
Sources close to the situation indicated that while the refinery might stop supplying fuel for the domestic market, it will continue to export petroleum products, as it sources its crude oil from the international market, paid for in U.S. dollars. However, Anthony Chiejina, a spokesperson for Dangote Group, denied any knowledge of plans to stop domestic fuel supply, stating, “I am not aware.”
This situation follows ongoing discussions between the Nigerian National Petroleum Company Limited (NNPCL) and Dangote Refinery regarding a new contract for the Naira-for-crude deal, which was initiated in October last year. The deal allowed Dangote Refinery to sell petroleum products to Nigerian marketers in naira, with NNPCL supplying crude oil purchased with the local currency.
In recent months, the price of Premium Motor Spirit (PMS) has fallen to about N860 per liter, partly due to a price competition between Dangote Refinery and NNPCL. The potential halt in domestic supply is creating uncertainty in the oil sector, with many awaiting developments in the ongoing negotiations.