The Nigerian government has confirmed that the Nigerian National Petroleum Company Limited (NNPCL) will begin supplying crude oil to the Dangote Refinery in exchange for payment in Naira from Tuesday, October 2024. This initiative aims to reduce the cost of Premium Motor Spirit (PMS), commonly known as petrol, in the country.
Crude Oil
Supply in Naira to Begin October
The
spokesperson for the Chairman of the Technical Sub-Committee on Domestic Sales
of Crude Oil in Local Currency, Dare Adekanmbi, confirmed the development in a
statement on Sunday. Zacch Adedeji, Chairman of the Federal Inland Revenue
Service and head of the sub-technical committee, is working diligently to
ensure the plan is implemented smoothly.
Adekanmbi
stated, "I can confirm to you that Chairman Zacch Adedeji is working day
and night to ensure that things go according to plan. He understands the importance
of implementing this agreement for the benefit of Nigerians."
This
follows the September 13, 2024 announcement that the Federal Executive Council,
led by President Bola Tinubu, approved the sale of crude oil to local
refineries in Naira, with the purchase of corresponding petroleum products also
in Naira. The move is set to commence from October 1, 2024.
NNPC to
Supply 385,000 Barrels per Day to Dangote Refinery
According
to the committee, from October 1, 2024, NNPC will start supplying approximately
385,000 barrels per day (bpd) of crude oil to the Dangote Refinery, to be paid
for in Naira. This translates to about 11.5 million barrels of crude oil being
supplied to the refinery monthly. In exchange, the Dangote Refinery will
provide equivalent volumes of refined diesel and petrol to the domestic market,
also paid for in Naira.
Calls to
Extend the Naira-for-Crude Deal to Other Refineries
The
Publicity Secretary of the Crude Oil Refinery Owners Association of Nigeria,
Eche Idoko, on Sunday urged the government to extend the Naira-for-crude
agreement to other modular refineries in the country, not just the Dangote
Refinery. "The committee is only discussing with Dangote at the
moment," he said, emphasizing the need for inclusivity to benefit the
entire sector.
Potential
Drop in Fuel Prices
Petroleum
marketers have expressed optimism that selling crude oil to local refineries in
Naira could lead to a significant reduction in petrol prices. Billy
Gillis-Harry, the National President of the Petroleum Products Retail Outlets
Owners Association of Nigeria, stated in August 2024 that this development
could positively impact the cost of fuel for Nigerian consumers.
Currently,
petrol prices range between N950 and N1,100 per litre nationwide, following a
recent price adjustment announced by NNPCL on September 15, 2024. The
state-owned oil company had disclosed that it bought petrol from the Dangote
Refinery at N898 per litre, although the refinery disagreed with this figure.
Dangote's
Stance on Petrol Pricing
The
Dangote Refinery has asked Nigerians to await an official announcement from the
Adedeji-led committee regarding the price of its petrol under the
Naira-for-crude deal. Aliko Dangote, President of the Dangote Group, recently
claimed that petrol produced at the Dangote Refinery is cheaper than imported
alternatives, although he did not specify the exact price.
House of
Representatives Pushes for Price Disclosure
In
light of the ongoing discussions, members of the House of Representatives have
mandated the Dangote Refinery to disclose the price of its petrol. However, as
of now, that information has not been made public.
Conclusion
The upcoming Naira-for-crude deal marks a significant step in reducing the cost of petrol in Nigeria. With NNPC set to supply crude oil to the Dangote Refinery starting October, Nigerians are hopeful that this move will lead to more affordable fuel prices. The extension of the deal to other modular refineries and transparency regarding petrol pricing will be crucial in ensuring the success of this initiative.
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