Tinubu Overrules NNPCL, Reinstates Naira-for-Crude Policy as Oil Prices Plunge and Economic Fears Deepen

In a strategic reversal of the Nigerian National Petroleum Company Limited’s (NNPCL) decision, President Bola Tinubu’s administration has reinstated the naira-for-crude oil policy, describing it as a cornerstone initiative intended to protect the country’s economy from mounting external shocks.

The federal government’s move comes against the backdrop of tumbling oil prices, now hovering around $60 per barrel—a drop triggered by the escalating global tariff war orchestrated by U.S. President Donald Trump, which has rattled energy markets and worsened fears of a global slowdown.

In a meeting held Tuesday with stakeholders including the Dangote Refinery and top oil and fiscal authorities, the Minister of Finance and Coordinating Minister for the Economy, Wale Edun, affirmed that the naira-for-crude scheme “remains in effect” and is “not a temporary measure.” Rather, he emphasized that it is a long-term economic directive of the Tinubu administration aimed at ensuring Nigeria’s energy security, boosting local refining, and insulating the nation from the volatile swings of the international oil market.

A day later, the Ministry of Finance posted an official statement on its X handle reinforcing the government’s position. The post disclosed that the Technical Sub-Committee on the Crude and Refined Product Sales in Naira initiative convened to assess progress and address implementation bottlenecks.

The committee is chaired by Edun, with Federal Inland Revenue Service (FIRS) Chairman Zacch Adedeji leading the technical sub-group. Also in attendance were NNPCL’s Chief Financial Officer, Dapo Segun; representatives from Dangote Petroleum Refinery; officials from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), the Central Bank of Nigeria (CBN), the Nigerian Ports Authority (NPA), and the African Export-Import Bank (Afreximbank). The Committee’s Secretary, Hauwa Ibrahim, was also present.

“The stakeholders reaffirmed the government’s continued commitment to the full implementation of this strategic initiative, as directed by the Federal Executive Council (FEC),” the ministry stated. “The Crude and Refined Product Sales in Naira initiative is not a temporary or time-bound intervention, but a key policy directive designed to support sustainable local refining, bolster energy security, and reduce reliance on foreign exchange in the domestic petroleum market.”

Triggered by Oil Crash and Economic Peril

The timing of the government’s announcement is no coincidence. Oil prices, Nigeria’s fiscal lifeline, have dipped to around $60 per barrel in recent weeks due to escalating trade tensions and retaliatory tariffs between the U.S. and China, intensified by Trump’s renewed push for economic confrontation. The decline has sparked alarm in oil-dependent economies like Nigeria, where revenue from crude accounts for over 70% of government earnings and more than 90% of foreign exchange inflows. It also comes against the backdrop of the $75 per barrel oil benchmark for Nigeria’s 2025 budget.

Even more troubling is a stark warning issued by investment bank Goldman Sachs, which cautioned that crude prices could fall below $40 per barrel in the near term if market instability continues. Such a scenario would spell disaster for Nigeria, which is already struggling with a widening budget deficit, soaring inflation, and a currency crisis. Analysts say a further plunge in oil revenue could severely compromise the government’s ability to finance capital projects and maintain critical public services.

“The real panic will start when Brent drops below $60. What has come below $60 so far is Western Texas Intermediate (WTI) — a heavy crude grade that’s $4-5 cheaper than the lighter grade Brent (that Nigeria’s blends are benchmarked with). Also surprised that the $23.1bn net foreign exchange reserves that the CBN claimed it has, is not coming to save the Naira at such critical time,” Kelvin Emmanuel, an energy analyst, said.

Against this backdrop, it is believed that the naira-for-crude policy is being resurrected as a buffer against the looming oil shock. The initiative allows the NNPCL to sell crude oil to local refineries, most notably the $20 billion Dangote Refinery—in naira, rather than in U.S. dollars. Government officials believe this will help conserve foreign reserves, reduce demand for hard currency, and ease pressure on the naira, which has suffered a sharp depreciation in years.

“The initiative remains in effect and will continue for as long as it aligns with the public interest and supports national economic objectives,” the ministry said.

The Fallout, the Reversal, and the New NNPCL Board

The policy was first introduced in July 2024 by the Federal Executive Council as part of broader reforms to localize the petroleum market and reduce Nigeria’s dependency on imported dollar-priced fuel. Under the scheme, NNPCL was directed to sell crude to local refineries in naira, to stabilize fuel prices and prevent imported inflation.

But in March 2025, the NNPCL, under the now-sacked Mele Kyari, abruptly declared the deal a six-month pilot program, stating that it had expired. This triggered an immediate halt in naira-denominated product sales by the Dangote Refinery, which warned that continuing to sell fuel in naira while buying crude in dollars would create an unsustainable mismatch.

Within days, the ripple effects were felt across the country. Petrol pump prices surged from about N860 to N1,000 per liter. Consumers groaned under the weight of the price hike, and economists warned of cascading effects on the transportation, food, and manufacturing sectors.

Some believe that the chaos, among other reasons, prompted swift action from President Tinubu, who fired Kyari along with the entire NNPCL board. In their place, he appointed a new 11-member board, naming Bashir Ojulari as Group Chief Executive Officer and Ahmadu Kida as Non-Executive Chairman. The move was widely interpreted as a signal of the president’s determination to reset the course of Nigeria’s energy policy.

Economic Lifeline or Mere Stopgap?

While the resumption of naira-for-crude sales is expected to bring short-term relief, particularly by keeping pump prices from spiraling further, experts caution that insufficient crude oil supply by the NNPCL remains a challenge that could limit how far the policy can go in addressing the deeper economic issues. The state-owned oil company has struggled to meet its crude supply obligation to Dangote Refinery – a development attributed to poor oil output and too many forward sale agreements.

However, in the face of a possible sub-$40 oil environment and a currency that’s already lost significant value this year, the government sees the initiative as a crucial tool for defending its fragile economy. According to fiscal analysts, the deal could relieve Nigeria’s central bank of significant pressure in managing dollar demand, while offering local refineries a cheaper source of crude.