The Nigerian National Petroleum Company (NNPC) will begin supplying crude oil in naira to the Dangote Petroleum Refinery on October 1, 2024, marking a significant step towards local currency transactions in the oil sector.
The Technical Sub-Committee on Domestic Sales of Crude Oil in Local Currency has confirmed that the Nigerian National Petroleum Company (NNPC) will commence the supply of crude oil in naira to the Dangote Petroleum Refinery starting on Tuesday, October 1, 2024.
This announcement follows the Federal Executive Council’s approval on September 13, 2024, under President Bola Tinubu’s leadership, to facilitate the sale of crude to local refineries and the purchase of petroleum products in naira.
The committee stated that NNPC will supply approximately 385,000 barrels per day (kbpd) to the Dangote refinery, translating to about 11.5 million barrels monthly.
Zacch Adedeji, the Chairman of the Technical Sub-Committee and also the Chairman of the Federal Inland Revenue Service (FIRS), confirmed the implementation is on track.
He highlighted the initiative’s potential to reduce pressure on the naira, eliminate unnecessary transaction costs, and improve the availability of petroleum products nationwide.
“This arrangement means the Dangote refinery will supply equivalent volumes of refined diesel and petrol to the domestic market in naira, ensuring stability and accessibility for Nigerians,” Adedeji explained.
While diesel will be sold in naira to interested off-takers, petrol (PMS) will be exclusively sold to NNPC, which will then distribute it to various marketers. All associated regulatory costs will also be paid in naira. A one-stop shop will be established to coordinate services from all relevant regulatory and security agencies to ensure smooth implementation of this initiative.
Adedeji mentioned that the technical committee will transition into an execution and monitoring committee based in Lagos for the next three to six months to oversee the arrangement’s success.
However, modular refineries have raised concerns about their exclusion from the current naira crude sales agreement. Eche Idoko, the Publicity Secretary of the Crude Oil Refinery-owners Association of Nigeria, noted that while discussions are ongoing with Dangote, no arrangements have been made for modular refineries, many of which are struggling with crude supply issues.
“Many modular refineries face a serious crude crisis. Some with a capacity of 10,000 barrels are only producing about 3,000 due to the unavailability of crude,” Idoko stated. He expressed hope that the committee would eventually include other refineries to avoid discrimination.
As Nigerians anticipate the start of the naira crude sales, they hope it will lead to a decrease in petrol prices.
The Dangote refinery has not disclosed its pricing for petrol since commencing sales on September 15, and it has denied reports of selling at N898 per litre, labelling such claims as misleading.
The Federal Government has indicated it will not intervene in the pricing dispute between NNPC and Dangote, citing the deregulation of the petroleum sector.
