President Tinubu Orders NNPCL to Sell Crude Oil to Dangote Refinery in Naira

 

In a landmark decision, President Bola Tinubu has directed the Nigerian National Petroleum Company Limited (NNPCL) to sell crude oil to the Dangote Refinery in Naira. This significant policy shift aims to stabilize fuel prices and the exchange rate between the dollar and the Naira.

Key Highlights:

• Directive Issued By: President Bola Tinubu
• Company Involved: Nigerian National Petroleum Company Limited (NNPCL)
• Recipient: Dangote Refinery
• Transaction Currency: Nigerian Naira
• Announcement By: Bayo Onanuga, Presidential Media Aide
• Platform: Official X Account (formerly Twitter)
• Date of Announcement: Monday

Official Statement

Bayo Onanuga, a presidential media aide, revealed the directive in a statement on his official X account. He explained the rationale behind the move:

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.

Details of the Deal

The Dangote Refinery, which currently requires 15 cargoes of crude oil annually worth $13.5 billion, will receive four cargoes from NNPCL. The Federal Executive Council (FEC) has approved the sale of 450,000 barrels, designated for domestic consumption, in Naira to Nigerian refineries, with the Dangote Refinery being used as a pilot project. The exchange rate for this transaction will be fixed for its duration.

Financial Facilitation

Afreximbank and other settlement banks in Nigeria will facilitate the transactions between Dangote and NNPCL. This innovative approach aims to eliminate the need for international letters of credit, thereby saving the country billions of dollars previously spent on importing refined fuel.

Impact on the Economy

This policy shift is expected to have several positive outcomes:

• Stabilization of Fuel Prices: By selling crude oil in Naira, the government aims to keep fuel prices stable.
• Exchange Rate Stability: The fixed exchange rate for the duration of the transaction will help maintain a stable Naira.
• Cost Savings: The elimination of the need for international letters of credit will save significant amounts of money.
• Support for Domestic Refineries: This move supports the growth and operation of domestic refineries, reducing reliance on imported refined products.

Context and Background

The directive comes amid ongoing disputes between the 650,000 barrel-per-day Dangote Refinery and various regulatory bodies in Nigeria’s oil and gas sector, including NNPCL and the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA).

Future Implications

This decision marks a game-changing intervention in Nigeria's oil and gas sector. By facilitating domestic trade in crude oil and supporting local refineries, the government aims to create a more self-sufficient and economically stable energy sector.

Stay tuned for more updates on this developing story.