President Bola Tinubu has directed the Nigerian National Petroleum Company Limited (NNPCL) to sell crude oil to the Dangote Refinery and other upcoming refineries in naira. This decision, announced by the President’s Special Adviser on Information and Publicity, Bayo Onanuga, aims to stabilize the pump price of refined fuel and the dollar-naira exchange rate.
Onanuga explained that the Dangote Refinery currently requires 15 cargoes of crude, costing $13.5 billion annually, and the NNPCL has committed to supplying four of these cargoes. The Federal Executive Council approved the sale of the 450,000 barrels intended for domestic consumption in naira to Nigerian refineries, starting with the Dangote refinery as a pilot. This approach includes fixing the exchange rate for the duration of the transaction, with Afreximbank and other Nigerian settlement banks facilitating the trade. This move aims to eliminate the need for international letters of credit and save billions of dollars spent on importing refined fuel.
This development follows Nigerian billionaire Femi Otedola’s call for the Federal Government to support Aliko Dangote and other local investors amid a dispute between the Dangote Refinery and the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA). The agency’s head, Farouk Ahmed, recently accused the Dangote Refinery of producing fuel with high sulfur levels and attempting to monopolize the oil industry, which could threaten Nigeria’s energy sector.