The Dangote Petroleum Refinery has received four crude oil shipments from the Nigerian National Petroleum Company Limited, NNPCL, as part of the naira-for-crude agreement initiated by the Federal Government.
The deliveries, which occurred over the past three weeks, mark the first phase of the program aimed at providing crude to domestic refineries in local currency. Officials from the refinery and government sources confirmed that more shipments are expected, with the first phase of this arrangement set to last six months.
The $20 billion Lekki-based refinery, which has been grappling with crude supply challenges since operations began, is now preparing to supply refined petroleum products such as Premium Motor Spirit, PMS, to local markets. The refinery plans to sell its refined products directly to dealers in naira.
This local crude supply initiative is part of the Federal Government’s broader strategy to address fuel shortages and reduce dependence on foreign imports. It follows complaints from the Dangote Group regarding international oil companies (IOCs) allegedly obstructing access to Nigerian crude. The IOCs were accused of prioritizing foreign markets, particularly Asia, and offering crude at inflated premiums through foreign agents, thus frustrating domestic operations.
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President Bola Tinubu’s administration responded by adopting a policy to sell crude to local refineries in naira, starting with the Dangote Refinery as a pilot project. The NNPCL is expected to supply about 385,000 barrels of crude per day to the refinery, with equivalent volumes of refined products released into the domestic market.
The Independent Petroleum Marketers Association of Nigeria has praised the naira-for-crude initiative, stating that it will alleviate the shortfall in PMS supply. Meanwhile, petrol imports to Nigeria have sharply decreased, signaling the impact of the domestic refining capacity ramp-up. Despite early challenges, the Dangote Refinery is projected to displace a significant portion of imported fuel by 2026, contributing to a more self-reliant energy sector.
As the refinery continues to increase production, officials remain optimistic that the current crude supply arrangements will help stabilize fuel prices in Nigeria, driven by market forces of supply and demand.
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