Dangote Refinery and Local Plants Yet to Purchase Crude in Naira, Despite Presidential Directive
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The Dangote Petroleum Refinery and other domestic refineries in Nigeria have yet to commence the purchase of crude oil in naira, despite a directive from President Bola Tinubu. The $20bn Dangote plant and other local refineries have not begun buying crude oil from the Nigerian National Petroleum Company Limited (NNPC) in naira, as instructed by the President last week.
The Crude Oil Refiners Association of Nigeria (CORAN) confirmed that individual refiners have written to the NNPC requesting crude, but there has been no response. The Federal Executive Council (FEC) recently adopted Tinubu’s proposal to sell crude to the Dangote refinery and other upcoming refineries in naira, starting with a pilot programme at the Dangote refinery. The exchange rate for this transaction will be fixed for its duration.
Eche Idoko, Publicity Secretary of CORAN, stated that the Nigerian Midstream and Downstream Petroleum Authority (NMDPRA) is expected to initiate the process. “We have not started buying crude from NNPC. Individual members have written to them (NNPC) already, and they have several requests from these refineries before them.
“Typically, we would expect our regulator, in this instance, the NMDPRA, to kickstart the process by calling for a meeting of all parties to discuss the framework for such supply or have NNPC respond to the various letters to it by the refineries requesting crude,” Idoko noted.
CORAN previously stated that purchasing crude oil in naira would reduce the cost of petrol and strengthen the naira against the dollar. Idoko praised President Tinubu for supporting indigenous refiners but stressed the need for an executive order to enforce the new directive. The crude oil refiners also seek a meeting with the economic team to establish a rate that would benefit the Nigerian market.
“Yes, we will see a rebound in the pricing of fuel once the President’s order is implemented. Mind you, the pronouncement alone is not enough. It must be with a force of law, either by executive order or by incorporating it into a new guideline so that the crude producers will be bound to sell to us in naira,” Idoko stated.
Domestic refiners, including Dangote, have long complained about the challenges in accessing crude oil for their plants. Recently, the management of Dangote Group highlighted ongoing difficulties, alleging that international oil companies (IOCs) were frustrating crude supply to the 650,000-capacity refinery. The group claimed that IOCs prefer selling crude through foreign agents, leading to higher local prices, as cargoes are offered at $2 to $4 per barrel above the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) official price.
The group also alleged that foreign oil producers prioritise selling Nigerian crude to Asian markets. A senior official at the Dangote refinery, who requested anonymity, confirmed that the plant had yet to start buying crude in naira from NNPC.
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