The Federal Government has set up a committee to ensure the implementation of crude oil sales to local refineries in naira. An agreement has been reached with the Dangote Petroleum Refinery for the rollout of Premium Motor Spirit (petrol) in September this year.
The sale of crude oil to Dangote Refinery and other local refineries will commence on October 1, 2024. Wale Edun, the Minister of Finance and Coordinating Minister of the Economy, announced this during a meeting in Abuja. Key roles were outlined for stakeholders, including the Nigerian Midstream and Downstream Petroleum Regulatory Authority, Central Bank of Nigeria, Nigerian Upstream Petroleum Regulatory Commission, and the African Export-Import Bank to ensure smooth implementation.
The Executive Chairman of the Federal Inland Revenue Service, Dr. Zacch Adedeji, and the Chairman of the Technical Sub-Committee reported that the first PMS delivery from Dangote is expected next month under existing agreements.
Updates on the Port Harcourt and Dangote Refineries were also provided, with significant production increases expected from November 2024. The minister emphasized the need for transparency and directed the Technical Sub-Committee to finalize details and prepare a report for the President, confirming that his directives are on track for implementation from September.
The Federal Executive Council approved that the 450,000 barrels meant for domestic consumption be offered in Naira to Nigerian refineries, using the Dangote refinery as a pilot. The move is to ensure the stability of the pump price of refined fuel and the dollar-naira exchange rate.
Dangote Refinery, at the moment, requires about 15 cargoes of crude oil yearly.
In response, the finance minister inaugurated a technical sub-committee tasked with developing the framework for the sale of crude oil to local refineries in naira.
Monday’s meeting marks the second to be held in seven days. Local refineries said they had yet to start buying crude oil in naira. The Crude Oil Refiners Association of Nigeria said letters were written to the NNPC. They disclosed that CORAN is asking for a crude supply contract with refineries that are operating and a conditional crude supply contract with those who are currently at ATC (Authority To Construct) and construction stages to enable the close out on their final investment decisions and bring their refineries to full operation.
Dangote Refinery and other domestic refiners have been complaining about the difficulties associated with accessing crude oil for their plants. The management of Dangote Group insisted that the IOCs were still frustrating crude supply to the 650,000-capacity refinery. In a statement, the group alleged that the IOCs insisted on selling crude oil to its refinery through their foreign agents, saying the local price of crude will continue to increase because the trading arms offer cargoes at $2 to $4 per barrel, above NUPRC official price.
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