Abuja, Nigeria – The Federal Government’s committee tasked with implementing crude oil sales to local refineries in naira has reached a significant agreement with the Dangote Petroleum Refinery, paving the way for the rollout of Premium Motor Spirit (PMS), commonly known as petrol, in September 2024.
During a meeting with the Implementation Committee on Monday, the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, announced that the sale of crude oil to the Dangote Refinery and other local refineries will commence on October 1, 2024. The announcement was made public through a post on the official social media page of the finance ministry, which detailed the progress on key initiatives under the committee’s purview.
The meeting, which was held in Abuja, outlined crucial roles for key stakeholders, including the Nigerian Midstream and Downstream Petroleum Regulatory Authority, the Central Bank of Nigeria, the Nigerian Upstream Petroleum Regulatory Commission, and the African Export-Import Bank. These entities will work together to ensure the smooth implementation of the naira-denominated crude oil sales.
“The Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, today led the Implementation Committee meeting on the transition to crude oil sales in naira,” the post stated. “The meeting reviewed progress on key initiatives, including the upcoming commencement of naira payments for crude oil sales to the Dangote Refinery starting October 1, 2024.”
Additionally, Dr. Zacch Adedeji, Executive Chairman of the Federal Inland Revenue Service and Chairman of the Technical Sub-Committee, reported that the first PMS delivery from Dangote is expected next month under the existing agreements.
Updates were also provided on the Port Harcourt and Dangote Refineries, with significant production increases anticipated from November 2024. Minister Edun emphasized the need for transparency in the process and directed the Technical Sub-Committee to finalize the details and prepare a report for the President, confirming that all directives are on track for implementation starting in September.
This move follows the Federal Executive Council’s approval on July 29 of President Tinubu’s proposal to halt the sale of crude oil to local refineries in foreign currency. Instead, the 450,000 barrels designated for domestic consumption will be sold in naira to Nigerian refineries, with the Dangote refinery serving as a pilot.
The decision is part of a broader strategy to stabilize the pump price of refined fuel and the dollar-naira exchange rate. The Dangote Refinery, currently requiring 15 cargoes of crude oil annually, has been at the center of discussions surrounding this new policy.
The Publicity Secretary of the Crude Oil Refiners Association of Nigeria (CORAN), Eche Idoko, confirmed last week that a meeting was held to address these changes. CORAN is pushing for crude supply contracts with operating refineries and conditional contracts with those in the construction stages to help finalize investment decisions and bring the refineries to full operation. Idoko highlighted that paying for crude oil in naira would reduce petrol costs and strengthen the naira against the dollar.
Despite these efforts, domestic refiners, including the Dangote Refinery, have faced challenges in accessing crude oil. The management of Dangote Group has recently expressed frustrations over difficulties in securing crude supplies, accusing International Oil Companies (IOCs) of prioritizing sales through foreign agents and increasing local crude prices by offering cargoes at $2 to $4 per barrel above the official price set by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC).
These tensions culminated in a public exchange between the Dangote Refinery and the NUPRC regarding the alleged supply of 29 million barrels of crude oil to the refinery. In response to the controversy, the Arewa Consultative Forum (ACF) issued a statement supporting the Dangote Petroleum Refinery. The ACF, through its National Publicity Secretary, Prof. Tukur Muhammad-Baba, voiced concern over the negative debates surrounding the refinery, describing it as a facility of national pride.
“The ACF delegation, which visited the facility on July 30, 2024, was impressed by its sophisticated quality testing and control laboratories, which meet and surpass global industry standards,” the forum stated, praising Aliko Dangote as a courageous and patriotic entrepreneur deserving of national support.