National Telescope national telescope newspaper
By Lami Victor KADUNA
President Bola Tinubu has approved the sale of crude oil to Dangote Petroleum Refinery in naira, a move that is expected to lower the prices of domestically refined petroleum products, according to oil marketers, refiners, and experts.
Downstream oil sector operators praised the President, noting that this decision would enhance the output of domestic refineries, increase the country’s foreign exchange reserves, and strengthen the naira. They also commended the media for keeping the issue in the spotlight, stressing that Nigerian refineries should not struggle to obtain US dollars for a commodity produced domestically.
On Monday, President Tinubu instructed the Nigerian National Petroleum Company Limited (NNPC) to sell crude to the Dangote refinery and other upcoming refineries in naira. This directive was announced by Bayo Onanuga, the Special Adviser to the President on Information and Publicity, through his official X handle.
Onanuga explained that the Federal Executive Council adopted the measure to stabilize the pump price of refined fuel and the dollar-naira exchange rate. The Dangote refinery, which has faced a crude oil supply crisis with International Oil Companies (IOCs) in Nigeria, will benefit from this policy. Previously, the refinery had to import crude due to supply issues from IOCs.
The Dangote refinery, requiring about 15 cargoes of crude oil annually at approximately $13.5 billion, will now receive crude in naira, with the NNPC committing to supply four cargoes. This policy extends to all domestic refineries, with the Dangote refinery as the pilot.
Onanuga also mentioned that the 450,000 barrels intended for domestic consumption would be sold to Nigerian refineries in naira, using a fixed exchange rate for the duration of the transaction. Afrieximbank and other Nigerian settlement banks will facilitate the trade between Dangote and NNPC, eliminating the need for international letters of credit and saving the country billions of dollars spent on importing refined fuel.
Special Adviser on Revenue, Zacch Adedeji, who also chairs the Federal Inland Revenue Service, highlighted that this move would reduce Nigeria’s reliance on foreign exchange for crude oil imports, saving approximately $7.3 billion annually. Monthly forex expenditure on petroleum products is expected to drop from $660 million to $50 million.
Adedeji emphasized that this policy would reduce economic unpredictability due to forex fluctuations and stabilize the pump price. He noted the approval would significantly reduce the country’s forex burden and associated finance costs.
Oil marketers and modular refinery operators praised the initiative, outlining the benefits it would bring to Nigeria. Chief Ukadike Chinedu, the National Public Relations Officer of the Independent Petroleum Marketers Association of Nigeria, thanked the President for addressing the frequent petrol scarcity by localizing crude oil sales in naira.
Eche Idoko, Publicity Secretary of the Crude Oil Refiners Association of Nigeria, stated that supplying crude to local refineries in naira would reduce petrol costs and strengthen the naira. He called for an executive order to enforce the new directive and a meeting with the economic team to set favorable rates for the Nigerian market.
Professor Dayo Ayoade from the University of Lagos remarked that the Federal Government’s decision to supply crude oil to Dangote and other refineries was expected, considering their investments in the sector. However, he raised concerns about whether the crude oil meant for local consumption had been used to secure loans.
The Dangote refinery and other domestic refiners have long complained about difficulties in accessing locally-produced crude. The management of Dangote Group recently accused IOCs of prioritizing foreign agents and selling crude at a premium, which impacts local refineries.
Mr. DVG Edwin, Vice President of Oil & Gas at Dangote Industries Limited, emphasized that IOCs had consistently frustrated the refinery’s efforts to obtain locally-produced crude. He urged the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) to address the pricing issues and ensure that local refineries could access crude oil at fair prices
