President Bola Tinubu has instructed the Nigerian National Petroleum Company Limited (NNPC) to sell crude oil to Dangote Refinery and other emerging refineries in Naira, according to reports from Nigerian media.
This directive aims to stabilize the price of petroleum products and reduce product shortages, addressing two persistent challenges in the country. Bayo Onanuga, the Special Adviser to the President on Information and Strategy, announced the decision on his official X handle, stating that the Federal Executive Council (FEC) adopted the move on Monday to ensure the stability of both the pump price of refined fuel and the dollar-Naira exchange rate.
According to PUNCH Online, Dangote Refinery currently needs 15 cargoes of crude annually, costing $13.5 billion. The NNPC has committed to supplying four cargoes. The FEC has approved that 450,000 barrels intended for domestic consumption be offered in Naira to Nigerian refineries, starting with the Dangote refinery as a pilot.
The statement added, “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. This game-changing intervention will eliminate the need for international letters of credit, further saving the country from dollar payments.”
This decision comes a week after Nigerian lawmakers launched an investigation into crude oil shortages and the import of poor-quality fuel, which have caused conflicts between Dangote Refinery and the nation’s oil regulator.
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The $20 billion Dangote Oil Refinery, established by Africa’s richest person, Aliko Dangote, began operations in January near Lagos. However, the refinery has faced difficulties in securing sufficient crude oil from Nigeria due to issues such as vandalism, sabotage, and inadequate investment.
Recently, the refinery accused major oil companies of obstructing its access to domestic crude oil and criticized the regulator for allowing the import of high-sulfur fuel, which negatively impacts its business. In response, the head of the Nigeria Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) claimed that the Dangote Refinery is only 45% complete and cannot meet the country’s demands. He also noted that the refinery’s diesel had a sulfur content of 650 to 1200 parts per million (ppm), worse than the imported fuel. Nigerian regulations limit sulfur content in diesel to 50 ppm, with enforcement beginning next year.
During a recent visit by lawmakers, Dangote proposed comparing his refinery’s diesel with others on the market. Tests revealed that Dangote’s diesel had a sulfur content of 87.6 ppm, while other samples exceeded 1800 ppm and 2000 ppm. Following these results, Dangote threatened to halt plans to invest in Nigeria’s steel industry due to accusations of attempting to create a monopoly. This latest development could help reduce the tension between Dangote refinery and the national oil company.
