The Federal Government’s committee, established to facilitate the sale of crude oil to local refineries in naira, has finalized an agreement with the Dangote Petroleum Refinery for the launch of Premium Motor Spirit (PMS), commonly known as petrol, in September 2023.
The government announced the commencement of crude oil sales to the Dangote Refinery and other local refineries, scheduled for October 1, 2024. This development was revealed by the Minister of Finance and Coordinating Minister of the Economy during a recent meeting of the Implementation Committee in Abuja.
Essential roles were designated for various stakeholders, including the Nigerian Midstream and Downstream Petroleum Regulatory Authority and the Central Bank of Nigeria, to guarantee seamless implementation of the initiative. The minister underscored the urgency for transparency and directed a Technical Sub-Committee to finalize the framework and submit a report to the President ahead of the planned rollout.
The Federal Executive Council previously approved a proposal to cease crude sales in foreign currency to local refineries, opting to sell the 450,000 barrels designated for domestic use in naira, making the Dangote refinery a pilot project. This strategic shift aims to stabilize the pump price of refined fuel while managing the dollar-naira exchange rate.
Current assessments indicate that Dangote Refinery will require approximately 15 cargoes of crude oil annually. In light of this, a technical sub-committee has been appointed to design the framework for crude oil sales in naira to local refineries.
Despite these advancements, local refineries expressed that they have yet to initiate crude purchase transactions in naira, as indicated by the Crude Oil Refiners Association of Nigeria. Alongside this, a call for supply contracts with operational refineries and those in construction has been made to ensure their successful transition to full operational capacity.
The spokesperson for the association highlighted that transitioning to naira for crude oil sales could reduce petrol costs and fortify the naira against the dollar. Furthermore, responses from the Dangote Group suggest ongoing challenges in securing crude oil due to external pressures from international oil companies, who are reportedly favoring foreign markets.
In a show of support, the Arewa Consultative Forum has praised the Dangote Petroleum Refinery amidst rising controversies, emphasizing its importance as a source of national pride. The forum lauded the refinery’s advanced quality testing capabilities and commended the vision and dedication of its founder, reinforcing the facility’s significance to the nation.
