The cancellation of the naira-for-crude policy by the Nigerian government, which allowed local refineries, including Dangote Refinery, to purchase crude oil in naira instead of dollars, has sparked fears of potential fuel price hikes and reawakened inflationary pressures.
The expiration of the policy in March, without any intentions of its renewal, has plunged economic experts into panic over the grave consequences on consumers, businesses, and the overall economy. Although the Federal Ministry of Finance has remained silent on negotiations with stakeholders in refineries, government sources say the government views the policy as a loss in revenue, thus the improbable renewal.
Economic experts argue that the programme’s cancellation would overturn present gains in fuel pricing and exchange rate stability. The Nigerian Economic Summit Group (NESG) has openly criticised the government’s stance, stating that it will discourage investment in domestic refining and force refiners to import crude at high international prices, which would necessarily lead to increased pump prices.
Industry players, including oil marketers, have described the move as insensitive, saying it would lead to supply shortages and have a chain effect on transport, production costs, and inflation. The policy reversal, they warn, would hurt investor confidence and further undermine an already weakened economy.
As Nigerians brace themselves for potential increases in fuel prices, the government is coming under pressure to either change its stance or face exacerbating economic hardship and derailing its reform agenda.
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