President Bola Tinubu has directed the Nigerian National Petroleum Company (NNPC) Limited to sell crude oil to Dangote Petroleum Refinery and other local refineries in naira. This directive, announced by Bayo Onanuga, special adviser on information and strategy to the president, was adopted by the federal executive council (FEC) on Tuesday.
“To ensure the stability of the pump price of refined fuel and the dollar-Naira exchange rate, the Federal Executive Council today adopted a proposal by President Tinubu to sell crude to Dangote Refinery and other upcoming refineries in Naira,” Onanuga said.
The Dangote Refinery currently requires 15 cargoes of crude, costing $13.5 billion annually, with NNPC committing to supply four. The FEC has approved that the 450,000 barrels meant for domestic consumption be offered in Naira to Nigerian refineries, starting with Dangote Refinery as a pilot. The exchange rate will be fixed for the duration of this transaction.
Afreximbank and other settlement banks in Nigeria will facilitate the trade between Dangote and NNPC Limited, eliminating the need for international letters of credit and saving the country billions of dollars used in importing refined fuels.
This decision follows a dispute involving Dangote Refinery, the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), and the Nigerian Upstream Petroleum Regulatory Commission (NUPRC). On June 4, Aliko Dangote, founder of Dangote Group, indicated that international oil companies (IOCs) were struggling to supply crude to his refinery. However, on July 15, NUPRC CEO Gbenga Komolafe described the claim as “erroneous,” citing the Petroleum Industry Act’s (PIA) provisions for willing buyer-willing seller transactions.
Despite this, on July 17, Dangote Industries Limited (DIL) management insisted that IOCs were frustrating its attempts to purchase crude feedstock. NMDPRA CEO Farouk Ahmed then claimed on July 18 that local refineries, including Dangote’s, produce inferior products compared to imports, which Dangote denied, demonstrating the quality of its diesel on July 20 during a visit by federal lawmakers.
Amid these allegations, lawmakers launched an investigation on July 22 into Ahmed’s claims and the assertion that IOCs are obstructing the Dangote refinery. On the same day, Heineken Lokpobiri, minister of state for petroleum resources (oil), convened a meeting with Dangote, Ahmed, Komolafe, and Mele Kyari, group CEO of NNPC, to resolve the dispute.
This intervention aims to stabilize fuel prices, support the naira, and enhance the viability of local refineries by facilitating easier access to crude oil through transactions in the local currency.
