The Technical Sub-Committee on Domestic Sales of Crude Oil in Local Currency announced on Sunday that the Nigerian National Petroleum Company Limited will begin supplying crude oil in naira to the Dangote Petroleum Refinery on Tuesday, October 1, 2024.
This development marks a significant step in localizing crude oil transactions, aiming to enhance the refinery’s operations and support the Nigerian economy.
On September 13, 2024, the Technical Sub-Committee on Domestic Sales of Crude Oil in Local Currency announced that the Federal Executive Council, led by President Bola Tinubu, approved the sale of crude oil to local refineries in naira.
This decision also includes the purchase of petroleum products in naira, aiming to bolster the domestic oil industry and enhance economic stability.
“From October 1, NNPC will commence the supply of about 385kbpd (385,000 barrels per day) of crude oil to the Dangote refinery to be paid for in naira,” the committee had declared.
The Chairman of the Technical Sub-Committee is Zacch Adedeji, who doubles as Chairman of the Federal Inland Revenue Service.
When contacted on Sunday regarding the status of the crude oil supply plan for the $20 billion Lekki-based Dangote refinery, Special Adviser on Media to the FIRS Chairman, Mr. Dare Adekanmbi confirmed that the plan remains intact.
He said, “I can confirm to you that the Chairman, Sub-Technical Committee, Zacch Adedeji, is working day and night to ensure that things go according to plans. He knows how important it is to have the agreement implemented as has been planned for the benefit of Nigerians.”
This arrangement implies that the NNPC will supply approximately 11.5 million barrels of crude oil to the Dangote refinery each month. In return, the refinery is set to release equivalent volumes of refined diesel and petrol to the domestic market, also priced in naira.
The panel explained in September that this initiative aims to reduce pressure on the naira, eliminate unnecessary transaction costs, and enhance the availability of petroleum products throughout the country.
“Since then, the implementation committee chaired by the Minister of Finance and we, the technical committee, have worked intensely with NNPC and Dangote refinery to fashion out the details of the modalities for the implementation of the FEC approval,” Adedeji had stated.
While announcing that crude oil will be sold to Dangote in naira starting October 1, the committee chairman and FIRS boss stated, “In return, the Dangote refinery will supply PMS (petrol) and diesel of equivalent value to the domestic market, also to be paid in naira.”
“Diesel will be sold in naira by the Dangote refinery to any interested off-taker. PMS will only be sold to NNPC. NNPC will then sell to various marketers for now. All associated regulatory costs (NPA, NIMASA, etc.) will also be paid in naira. We are also setting up a one-stop shop that will coordinate service provision from all regulatory agencies, security agencies, and other stakeholders to ensure a smooth implementation of this initiative.”
Adedeji explained that the technical committee responsible for developing the initiative will transition into an implementation and monitoring committee.
The committee, which includes the Permanent Secretary of the Federal Ministry of Finance, Mrs Lydia Jafiya; the FIRS boss, as well as representatives from NNPC, Central Bank of Nigeria, AfreximBank, and the Nigerian Upstream Petroleum Regulatory Commission, was set up to craft a robust template that will ensure the successful implementation of the initiative.
Meanwhile, modular refineries have urged the government to establish modalities for supplying crude oil to their plants as well.
