Market News

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Given the current situation in Nigeria’s oil market relating to the Naira-for-Crude saga with the Dangote Refinery, oil marketers have begun amassing Premium Motor Spirit, otherwise known as petrol.

• Oil marketers are hoarding petrol in anticipation of a fuel price increase.
• Depot owners are already increasing the price, leading to concerns about profiteering.
• The suspension of the Naira-for-Crude initiative by Dangote Refinery could lead to heavy losses for hoarders.

The projection that the halt in the Naira-for-Crude initiative which allowed local refineries, including the Dangote Refinery to buy crude in local currency, would lead to a fuel crisis is beginning to take hold.

As currently reported, retailers are hoarding fuel to guarantee they have enough to sell at a higher rate, having estimated that the price of gasoline will increase shortly, especially considering that the Dangote Refinery has touted selling petrol in dollars.

This, according to the Independent Petroleum Marketers Association of Nigeria (IPMAN), which issued a warning could lead to heavy losses.

What IPMAN said

During an interview with the Punch Newspaper, Chinedu Ukadike, the National Publicity Secretary of IPMAN, noted that while some filling stations were racing to gather fuel, depot owners were making money.

“Some depot owners are already increasing the price. But we are also asking our marketers not to panic-buy. Because definitely when the Dangote refinery comes back and reverses the price, it will be a huge loss for these marketers. Depot owners are using this opportunity to profiteer. This is not good for the economy,” he stated.

“Some marketers are also stockpiling PMS in a bid to increase the price based on the suspension of naira sales by the Dangote refinery. They speculate that the price will go higher and they will make more money from the fuel they are buying now. It may not be so. This issue will be resolved,” he added.

He also noted that the projections could be wrong, leading to a loss for hoarders.

“Dangote may crash the price and most of them with high volumes of PMS will run into problems. So, all marketers should be careful to avoid losses,” he advised.

Furthermore, he pointed out that the suspension of the Naira-for-Crude initiative was not a foregone conclusion, and that discussions are still being held.

“I have gathered that the Federal Government and Dangote refinery are almost resolving this matter,” he stated.

“The two of them are reviewing the naira-for-crude deal to continue the sale of crude oil in naira to the refinery again. But the official statement has not come out. We are waiting for the official statement,” he continued.

Naira-for-crude debacle with the Dangote Refinery

The Nigerian National Petroleum Company (NNPC) Limited recently discontinued its Naira-for-oil program, which involves selling crude to regional refineries in the nation's currency.

Dangote Niara for Crude sale

The report that the NNPC had forward-sold all of its crude, even though production levels were greater now than when the arrangement started almost six months ago, served as the basis for the decision.

"Forward-sold all its crude" indicates that the Nigerian National Petroleum Company (NNPC) Limited has already sold future petroleum output ahead of schedule, maybe in order to meet contractual commitments, pay off debts, or obtain quick cash.