The Technical Sub-Committee on Domestic Sales of Crude Oil in Local Currency has confirmed that the Nigerian National Petroleum Company Limited (NNPC) will begin supplying crude oil to the Dangote Petroleum Refinery in naira starting Tuesday, October 1, 2024. This move is part of the Federal Government’s broader initiative to sell crude to local refineries and purchase petroleum products in naira.
The committee, led by Zacch Adedeji, Chairman of the Federal Inland Revenue Service (FIRS), stated that the NNPC will supply approximately 385,000 barrels per day (kbpd) of crude oil to the $20 billion Lekki-based Dangote refinery. The refinery will in turn release equivalent volumes of refined petroleum products, including petrol and diesel, into the domestic market, all transacted in naira.
This initiative, announced by the Federal Executive Council on September 13, 2024, is expected to reduce pressure on the naira, eliminate unnecessary transaction costs, and ensure a steady supply of petroleum products across the country. Adedeji, while outlining the plan, said, “In return, the Dangote refinery will supply petrol and diesel of equivalent value to the domestic market to be paid in naira.”
The move is seen as a key step in addressing the nation’s fuel supply challenges and stabilizing the energy market. Diesel will be sold directly by Dangote to interested buyers, while petrol will be sold exclusively to NNPC, which will distribute the product to various marketers.
Mr. Dare Adekanmbi, Special Adviser on Media to the FIRS Chairman, confirmed that preparations for the naira-based crude oil sale are on track. “The Chairman, Sub-Technical Committee, Zacch Adedeji, is working tirelessly to ensure the successful implementation of the agreement. He understands how critical this is for the Nigerian economy,” he said.
The deal means that the Dangote refinery will receive about 11.5 million barrels of crude oil monthly. The refinery began petroleum sales on September 15, but has yet to announce official pricing, amidst concerns and speculation about the cost of petrol. Dangote Group denied claims that it sold petrol at N898 per litre to the NNPC, labeling such reports as misleading.
The Technical Sub-Committee, which includes representatives from the Ministry of Finance, NNPC, Central Bank of Nigeria, AfreximBank, and the Nigerian Upstream Petroleum Regulatory Commission, is now transitioning to an implementation and monitoring phase. The committee will be based in Lagos for the next three to six months to oversee the execution of the naira-for-crude oil sales agreement.
However, modular refineries across the country have raised concerns about being left out of the arrangement. Eche Idoko, Publicity Secretary of the Crude Oil Refinery-owners Association of Nigeria (CORAN), called on the government to include modular refineries in the naira-based crude oil supply deal. Idoko stated that many modular refineries are struggling with erratic crude supply, leading to reduced production capacity.
Despite these challenges, Nigerians remain hopeful that the shift to naira-based crude sales will help bring down the cost of petrol and ease the pressure on the country’s foreign exchange reserves. A formal announcement on the pricing of refined products is expected from the presidential committee overseeing the initiative.
