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The Federal Government is weighing a dollar-for-naira swap arrangement to ease Dangote Refinery’s growing foreign exchange burden as crude suppliers continue to demand payment in dollars.
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Dangote says inadequate crude supplied under the naira-for-crude initiative has forced it to rely heavily on imports while selling petrol locally in naira.
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The proposed arrangement could help sustain domestic fuel sales in naira as the refinery grapples with rising crude import costs and foreign exchange shortages.
Aug 03, (THEWILL) — The Federal Government is weighing a dollar swap arrangement that would allow the Dangote Petroleum Refinery to convert proceeds from petrol sold in naira into foreign exchange to fund crude oil purchases, as forex shortages continue to strain the refinery’s operations.
A senior refinery official, who spoke on condition of anonymity because of the sensitivity of the discussions, said the government assured the company on Friday that it would make dollars available in exchange for naira proceeds generated from domestic fuel sales.
According to the source, the proposed arrangement is intended to ease the refinery’s growing foreign exchange burden after the naira-for-crude initiative failed to supply sufficient crude volumes.
Refinery battles forex pressure
The Dangote refinery was expected to receive about 13 million barrels of crude monthly under the naira-for-crude initiative to refine and sell petroleum products locally in naira.
However, the official said the refinery has been receiving less than 35 percent of the allocation, forcing it to source crude from countries including the United States, Angola, Ghana and Libya.
Although the refinery buys crude in US dollars, it continues to sell petrol to Nigerians in naira, creating a widening foreign exchange mismatch running into billions of dollars.
“As you know, we had earlier stopped selling in naira because we were not getting the dollars for the products we sold in naira, even though we had paid in US dollars for the crude,” the official said.
“The Federal Government has assured us that we will receive the dollars equivalent of the products sold locally.”
The source stressed that access to foreign exchange remains critical because neither international suppliers nor the Nigerian National Petroleum Company Limited sells crude to the refinery in naira, except for limited volumes supplied under the domestic arrangement.
Crude shortfall forces imports
Industry sources familiar with the arrangement said crude deliveries under the naira-for-crude framework had dropped to about four million barrels monthly, well below the refinery’s requirements despite higher national crude production.
The refinery has consequently increased crude imports and is also preparing to export a larger share of its refined products to generate foreign exchange.
Official cargo records show the refinery imported 40.40 million barrels of crude between May and June 2026 at a combined cost of about $4.48 billion.
The refinery said the figures were released to dispel claims that its pricing reflects daily international crude prices, explaining that crude purchases are made weeks or months in advance under contracts linked to monthly average pricing rather than spot market rates.
Naira-for-crude deal under strain
President Bola Tinubu introduced the naira-for-crude initiative in July 2024 to support local refining by allowing domestic refineries to buy crude in the local currency.
Although the arrangement was suspended by the NNPC in early 2025 before being restored indefinitely by the Federal Government, Dangote Refinery has repeatedly complained that crude allocations remain insufficient to sustain naira-denominated fuel sales.
Government officials had yet to respond to enquiries on the proposed dollar swap arrangement at the time of filing this report.
Ogochukwu Onwaeze is a writer specializing in business and economic journalism. At THEWILL News Media, she translates market trends, financial developments, and policy shifts into clear and engaging stories.
