Nigerians could soon see lower petrol prices as the federal government considers extending the naira-for-crude policy. This move, combined with falling global crude oil prices and a stable naira, may reduce the cost of fuel across the country.
Why Petrol Prices May Drop
The naira-for-crude policy, introduced on October 1, 2024, allows local refineries, including Dangote Refinery, to buy crude oil from the Nigerian National Petroleum Company Limited in naira instead of dollars. The policy was set to expire on March 31, 2025, but ongoing discussions suggest it may continue. A government committee met on March 13, 2025, in Abuja to review its impact, showing interest in sustaining the framework.
A senior official said the committee examined crude oil deliveries and production updates. The goal is to ensure a steady supply of crude to local refiners while reducing reliance on dollar-based imports. This helps conserve foreign exchange and stabilise fuel prices.
With the global price of Brent crude falling from $76.48 per barrel in February to $70.58 in March, and the naira trading at around N1,517.93 per dollar, the landing cost of imported petrol has dropped to N797.66 per litre. Dangote Refinery has also reduced its ex-depot price to N825 per litre, creating competition with imported fuel and driving prices down.
Chief Ukadike Chinedu, spokesperson for the Independent Petroleum Marketers Association of Nigeria, said the trend is promising. He noted that if crude prices remain low and the naira-for-crude policy is extended, petrol could sell for as low as N800 per litre. Earlier in March, Dangote Refinery had already cut retail prices to N860 per litre, down from a peak of N1,030 per litre in October 2024.
Challenges Ahead
Despite the positive outlook, some challenges remain. Dangote Refinery temporarily suspended naira-based sales on March 19, 2025, due to insufficient crude supply from NNPCL. The refinery cited an imbalance between its naira-denominated sales and the volume of crude received, forcing it to shift to dollar-based transactions. This raised concerns that fuel prices might increase if traders struggle to obtain foreign currency, which could weaken the naira.
However, negotiations between NNPCL and Dangote Refinery on March 11, 2025, suggest that a resolution may be near. If both parties reach an agreement, the policy could continue, keeping fuel prices stable.
What’s Next for Petrol Prices?
Analysts caution that petrol prices will continue to depend on crude oil costs and exchange rates. Billy Gillis-Harry, President of the Petroleum Products Retail Outlet Owners Association of Nigeria, said that if OPEC+ increases oil production in April, crude prices could drop further. Combined with an extended naira-for-crude policy, this could provide significant relief for Nigerians.
Since President Bola Tinubu removed fuel subsidies in May 2023, petrol prices have surged from N195 per litre to over N1,000 in some areas, putting pressure on households and businesses. The naira-for-crude policy and Dangote Refinery’s increased output have been key in reversing this trend. With the refinery’s capacity at 650,000 barrels per day, Nigeria is moving closer to ending its dependence on imported fuel.
As of March 24, 2025, at 5:59 AM EDT, the government is yet to make an official announcement on whether the policy will be extended. However, with discussions ongoing and market conditions improving, Nigerians remain hopeful that fuel prices will continue to fall.