The provision of gas from Dangote Refinery to the Nigerian market has come to a finish following the collapse of its naira-for-rude agreement with the Nigerian National Petroleum Company (NNPC).
This unexpected constructing has sparked concerns about gas availability and potential impress increases.
Why did Dangote stop supplying gas?
The naira-for-rude deal allowed Dangote Refinery to buy rude oil in naira and sell refined merchandise to local entrepreneurs in the same forex. This association was supposed to stabilize gas offer and crop Nigeria’s reliance on costly buck-based gas imports.
Alternatively, with the deal now terminated, Dangote Refinery need to purchase rude in bucks, making local offer much less favorable.
As an different of supplying Nigeria, the refinery has shifted focal level to exporting gas, where it would possibly most likely most likely form in overseas change. This switch raises fears that Nigerians would possibly perchance well face one other round of gas impress hikes if domestic offer turns into tighter.
NNPC’s place of residing on the declare
In accordance to Olufemi Soneye, NNPC’s Chief Corporate Communications Officer, the firm has supplied over forty eight million barrels of rude oil to Dangote Refinery since October 2024, bringing the total offer to more than 84 million barrels for the reason that refinery’s open.
Alternatively, the sizzling agreement is situation to expire at the tip of March 2025, and negotiations for a up to date deal are aloof ongoing.
The manager had before the entirety pushed aside claims that the naira-for-rude protection was being discontinued. Nonetheless now, with Dangote stepping support from local offer, the affect is turning into more evident.
What happens subsequent?
The top of this agreement also can accept as true with important financial implications. If Dangote Refinery continues to prioritize exports over domestic sales, gas prices in Nigeria would possibly perchance well upward push even greater. The Nigerian executive and enterprise stakeholders are below strain to procure to the bottom of the peril before it leads to a first-rate gas crisis.
For now, all eyes are on the negotiations. Will a up to date deal be reached to restore offer to the local market? Or will Nigerians accept as true with to brace for one other round of gas scarcity? Time will checklist.
