The Federal Government’s committee tasked with implementing crude oil sales to local refineries in naira has finalized an agreement with Dangote Petroleum Refinery for the rollout of Premium Motor Spirit (PMS) in September 2024.
The sale of crude oil to Dangote Refinery and other local refineries is set to commence on October 1, 2024. This was announced by the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, during a meeting with the Implementation Committee in Abuja.
The committee’s meeting reviewed progress on key initiatives, including the transition to naira payments for crude oil sales. Key stakeholders, such as the Nigerian Midstream and Downstream Petroleum Regulatory Authority, Central Bank of Nigeria, Nigerian Upstream Petroleum Regulatory Commission, and the African Export-Import Bank, were assigned specific roles to ensure a smooth implementation.
The first delivery of PMS from Dangote Refinery is expected next month under existing agreements, according to Dr. Zacch Adedeji, the Executive Chairman of the Federal Inland Revenue Service, who also chairs the committee’s Technical Sub-Committee. Significant production increases from both the Port Harcourt and Dangote Refineries are anticipated starting in November 2024.
The move to sell crude oil in naira is part of a broader strategy to stabilize the pump price of refined fuel and the dollar-naira exchange rate. The Federal Executive Council had previously approved President Tinubu’s proposal for the Nigerian National Petroleum Company (NNPC) to halt the sale of crude oil to local refineries in foreign currency, using Dangote Refinery as a pilot project.
Local refiners, however, have expressed concerns about the practical implementation of this initiative. The Crude Oil Refiners Association of Nigeria (CORAN) recently requested crude supply contracts with operating refineries and conditional contracts with those in the construction stages to facilitate their final investment decisions.
The supply of crude oil in naira is expected to lower petrol costs and strengthen the naira. However, Dangote Refinery has faced challenges in accessing crude, with allegations that International Oil Companies (IOCs) are prioritizing foreign sales over domestic needs.
The Arewa Consultative Forum has voiced support for the Dangote Refinery, emphasizing its importance as a source of national pride and urging support for its operations amid ongoing controversies.