President Bola Tinubu’s approval for the sale of crude oil to the Dangote Petroleum Refinery in naira is expected to have a significant impact on the oil market. This decision is predicted to lead to a crash in the prices of domestically refined petroleum products, as stated by oil marketers, refiners, and experts on Monday.
Operators in the downstream oil sector have expressed their support for the President’s decision, noting that it will enhance the output of domestic refineries, bolster the country’s foreign exchange reserves, and strengthen the naira. They also commended the media for consistently highlighting this issue, emphasizing that Nigerian refineries should not struggle to obtain United States dollars to procure a commodity that is produced within the country.
President Tinubu directed the Nigerian National Petroleum Company Limited to sell crude to the Dangote refinery and other upcoming refineries in naira. This move was confirmed by the Special Adviser to the President on Information and Publicity, Bayo Onanuga, in a post via his official handle.
Onanuga further explained that the Federal Executive Council endorsed this decision to ensure the stability of the pump price of refined fuel and the dollar-naira exchange rate. The Dangote refinery has previously faced challenges in crude oil supply from International Oil Companies operating in Nigeria and has encountered confrontations with the country’s midstream/downstream regulator.
The 650,000 barrels per day refinery initially received crude oil from NNPC and a few IOCs earlier this year but later faced difficulties as IOCs were reluctant to supply crude to the plant. Consequently, it had to resort to massive importation of crude oil. The Dangote refinery currently requires about 15 cargoes of crude oil annually, amounting to approximately $13.5 billion. NNPC has committed to supply four cargoes. The recent directive by the President will mandate the supply of this product to Dangote and other domestic refineries in naira instead of dollars.
Onanuga also revealed that the Federal Executive Council approved that the 450,000 barrels meant for domestic consumption be offered in naira. This decision is anticipated to have a far-reaching impact on the oil industry and the economy as a whole.
