The Nigerian government has confirmed that a new crude oil supply agreement, paid for in Naira, will begin on Tuesday, October 1, 2024. The Nigerian National Petroleum Company Limited (NNPCL) will start supplying crude oil to the Dangote Refinery under this arrangement, with the goal of reducing the high cost of Premium Motor Spirit (PMS), commonly known as petrol, in the country.
This announcement was made by Dare Adekanmbi, the spokesperson for Zacch Adedeji, who serves as the Chairman of the Technical Sub-Committee on Domestic Sales of Crude Oil in Local Currency. In a statement released on Sunday, Adekanmbi shared that the committee is working tirelessly to ensure that this plan, which has been approved by the Federal Executive Council (FEC), goes ahead as scheduled.
“I can confirm to you that the Chairman, Sub-Technical Committee, Zacch Adedeji, is working day and night to ensure that things go according to plans. He knows how important it is to have the agreement implemented as has been planned for the benefit of Nigerians,” he said.
On September 13, 2024, the Federal Executive Council, led by President Bola Tinubu, gave the green light for the sale of crude oil to Nigerian refineries in Naira, instead of foreign currency. The sale of petroleum products, such as petrol and diesel, will also be priced in Naira. The new system is set to commence on October 1, 2024, and is expected to bring some relief to Nigerians burdened by high fuel prices.
Under the terms of the deal, the NNPCL will supply 385,000 barrels of crude oil per day to the Dangote Refinery, equating to around 11.5 million barrels of crude per month. The refinery, in return, will supply refined products, including petrol and diesel, to the domestic market, also in Naira.
While this agreement focuses on the Dangote Refinery, there have been calls for it to be extended to other smaller modular refineries within Nigeria. Eche Idoko, the Publicity Secretary of the Crude Oil Refinery Owners Association of Nigeria, stated, “The committee is only discussing with Dangote at the moment,” and suggested that including other refineries could further improve fuel availability and pricing.
Petroleum marketers have expressed optimism about the new arrangement, believing it could lead to a drop in fuel prices. Billy Gillis-Harry, the National President of the Petroleum Products Retail Outlets Owners Association of Nigeria, indicated earlier in August 2024 that selling crude oil in Naira to local refineries would lower petrol prices across the country.
Currently, Nigerians are paying between N950 and N1,100 per litre of petrol, following price adjustments made by the NNPCL after September 15, 2024. The state oil company had purchased petrol from the Dangote Refinery at N898 per litre, though the refinery reportedly disagreed with this pricing.
Aliko Dangote, President of Dangote Group, has previously claimed that petrol from his refinery is cheaper than imported alternatives, though he has yet to disclose the specific price. Meanwhile, members of Nigeria’s House of Representatives have requested that Dangote Refinery make its petrol pricing public, but no official price has been released as of yet.
