The supply of crude oil in naira to the Dangote Petroleum Refinery by the Nigerian National Petroleum Company Limited is to last for six months in the first instance.
This will be the mode of operation pending a further review by the Technical Sub-Committee on Domestic Sales of Crude Oil in Local Currency.
Multiple sources from the committee and the Dangote refinery confirmed on Tuesday that the naira-for-crude deal would last six months in the first phase because crude oil, being an international product, is priced in dollars.
Meanwhile, Bloomberg reported Tuesday that the Federal Government was set to deliver up to 400,000 barrels of Nigerian crude oil daily to the Dangote refinery.
The report said the development is expected to take place over the next two months, amounting to 24 million barrels of Nigerian crude oil supply between October and November 2024.
Several sources said the naira-for-crude deal is to last for six months. They also stated that the product is still being expected by the Dangote refinery.
“We’ve realised that many Nigerians are excited that the government has agreed to the naira-for-crude deal, but most people don’t know that the deal is to last six months in the first instance,” an impeccable source at the Dangote refinery who spoke in confidence due to lack of authorisation to speak on the matter, stated.
On Saturday the Federal Government said it had commenced the sales of crude oil and other refined products in naira. The Federal Ministry of Finance disclosed this in a post on its X handle.
Last month, the Technical Sub-Committee on Domestic Sales of Crude Oil in Local Currency announced that the Federal Executive Council under the leadership of President Bola Tinubu had approved the sale of crude to local refineries in naira and the corresponding purchase of petroleum products in naira.
“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 in naira,” the committee had declared.
The government explained in September that the naira-for-crude initiative would help reduce pressure on the naira, eliminate unnecessary transaction costs, and improve the availability of petroleum products across the country.
However, sources stated on Tuesday that the deal would not last forever.
“The deal is for six months in the first instance. People shouldn’t think it is forever. This is a dollar-based business, so supplying it in naira though at the equivalent dollar rate is significant. The President should be commended for this.
“Otherwise, the local crude would have been purchased from foreign-based traders who often markup their prices and this has its effect on the cost of producing refined commodities whether in Nigeria or elsewhere,” a senior official at Dangote refinery stated.
A member of the committee on crude sales in naira also corroborated the position, stating that “the deal is for six months in the first instance and would be reviewed when the need arises.”
