After a brief period of relief at the pumps, Nigerians are once again grappling with soaring petrol prices following the suspension of a naira-for-crude oil arrangement between the Federal Government and the Dangote Petroleum Refinery.

The controversial policy shift has triggered a wave of concern across the country, with fuel prices climbing towards ₦1,000 per litre in parts of the country, reversing months of declining costs that had brought hope to millions.

At the heart of the crisis is the Federal Government’s decision to discontinue selling crude oil to the Dangote refinery in naira, a policy that was initially introduced to ease foreign exchange pressure and stabilize fuel prices after the removal of petrol subsidies.

The refinery, which began operations in late 2023, had used the local-currency crude deal to drive down the cost of premium motor spirit (PMS) from over ₦1,100 per litre to ₦860. The move was widely welcomed by consumers and helped eliminate long-standing queues at filling stations.

However, pressure from petroleum product importers and other industry players—who claimed the policy gave Dangote an unfair market advantage—appears to have swayed government decision-makers.

Industry sources revealed that importers were suffering heavy losses due to the price cuts introduced by Dangote. According to some stakeholders, daily losses among importers were estimated at ₦2.5 billion, totaling about ₦76.5 billion in one month.

While the Dangote refinery’s pricing initially forced the Nigerian National Petroleum Company Limited (NNPCL) and other importers to slash their pump prices, recent developments indicate that the landscape is shifting once more. With the end of the naira-for-crude policy in March, Dangote was forced to suspend local-currency sales, citing the mismatch between its crude procurement—still denominated in U.S. dollars—and retail transactions in naira.

“Dear valued customers, we wish to inform you that the Dangote Petroleum Refinery has temporarily halted the sale of petroleum products in naira,” the company said in a statement. “This decision is necessary to avoid a mismatch between our sales proceeds and our crude oil purchase obligations.”

In the immediate aftermath of the announcement, prices at depots rose from ₦825 to ₦900 per litre. Dangote’s partners, including MRS, Heyden, and Ardova, also raised prices to ₦930 per litre, while some marketers now sell PMS for as high as ₦970.

Industry observers say the development represents a major setback for Nigeria’s effort to reduce fuel costs and promote local refining. Critics argue that oil sector cartels—commonly referred to as “oil mafias”—are influencing government policy to protect their market share.

Aliko Dangote, President of the Dangote Group, had earlier warned of attempts by entrenched interests to frustrate the operations of his $20 billion refinery. The refinery, capable of processing 650,000 barrels per day, has been described by analysts as a transformative force in Nigeria’s downstream sector and a disruptor of traditional supply chains in the Atlantic Basin.

The President’s Special Adviser on Revenue and Chairman of the Federal Inland Revenue Service, Zacch Adedeji, had previously defended the naira-for-crude deal, stating that it could save Nigeria up to $7.3 billion annually in foreign exchange and reduce monthly FX expenditure on petroleum products from $660 million to just $50 million.

Despite this, the policy was quietly shelved, with no official explanation from the government. The decision has drawn criticism from consumer advocates and independent marketers, who argue that the policy had tangible benefits for the public.

Vice President of the Independent Petroleum Marketers Association of Nigeria (IPMAN), Hammed Fashola, described the naira-for-crude deal as a “game changer,” urging the Federal Government to reconsider its stance.

“If we say there is no more subsidy, fine,” Fashola said. “But that kind of naira-for-crude arrangement would help bring down the prices of petroleum products and make them affordable. We must consider the citizens.”

However, the Depot and Petroleum Products Marketers Association of Nigeria (DAPPMAN) maintains a contrary view. Its Executive Secretary, Olufemi Adewole, argued that denominating crude oil transactions in naira could undermine Nigeria’s forex stability and deter foreign investment.

“The global oil market operates in U.S. dollars due to its stability,” Adewole stated. “Tying crude oil transactions to the naira could lead to capital flight and discourage foreign investors.”

Analysts say the situation underscores Nigeria’s struggle to balance market liberalisation with the need to protect its citizens from the inflationary effects of fuel price hikes.

Meanwhile, consumers continue to bear the brunt of the ongoing policy reversal. Transportation costs are rising, inflation is accelerating, and uncertainty looms over the affordability of essential commodities.

As pump prices inch closer to ₦1,000 per litre, observers warn that the government must act decisively to shield the economy from further shocks. Many are calling on President Bola Tinubu to take a firm stand against vested interests and implement a consistent and transparent energy policy that serves both the public and long-term national development.

The Dangote refinery’s short-lived success in reducing fuel prices offered a glimpse of what local refining could mean for Nigeria. But unless the Federal Government reinstates supportive policies and resists pressure from oil cartels, that vision may fade—along with the hopes of millions of Nigerians.