President Bola Tinubu has directed the Nigerian National Petroleum Company (NNPC) Limited to sell crude oil to Dangote Petroleum Refinery and other refineries in naira.
According to Bayo Onanuga, special adviser on information and strategy to the president, on Tuesday, the proposal was adopted by the federal executive council (FEC).
“To ensure the stability of the pump price of refined fuel and the dollar-Naira exchange rate, the Federal Executive Council today adopted a proposal by President Tinubu to sell crude to Dangote Refinery and other upcoming refineries in Naira,” Onanuga said.
Dangote Refinery at the moment requires 15 cargoes of crude, at a cost of $13.5 billion yearly. NNPC has committed to supply four.
But the FEC has approved that the 450,000 barrels meant for domestic consumption be offered in Naira to Nigerian refineries, using the Dangote Refinery as pilot. The exchange rate will be fixed for the duration of this transaction.
Afreximbank and other settlement banks in Nigeria will facilitate the trade between Dangote and NNPC Limited. The game changing intervention will eliminate the need for international letters of credit. It will also save the country of billions of dollars used in importing refined fuels.
The decision followed the dispute between Dangote Refinery, the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), and the Nigerian Upstream Petroleum Regulatory Commission (NUPRC).
On June 4, Aliko Dangote, the founder of Dangote Group, said some international oil companies (IOCs) were struggling to supply crude to his refinery.
However, speaking on ARISE News on July 15, Gbenga Komolafe, chief executive officer of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) described the claim as “erroneous” as the Petroleum Industry Act (PIA) has provisions that guide willing buyer-willing seller transactions.
Later on July 17, the management of Dangote Industries Limited (DIL) insisted that IOCs are frustrating its request to purchase crude feedstock for the refinery.
Also, Farouk Ahmed, chief executive officer (CEO) of NMDPRA, on July 18, said local refineries, including the Dangote refinery, produce inferior products compared to the ones imported into the country.
Dangote denied the allegation by testing diesel from his refinery on July 20 when federal lawmakers visited the plant.
The billionaire also called for a probe into the allegations made by the NMDPRA.
On July 22, the lawmakers launched investigations into Ahmed’s claim.
They said allegations that the IOCs in Nigeria are frustrating the survival of the Dangote refinery will also be probed.
On the same day, Heineken Lokpobiri, minister of state petroleum resources (oil), held a meeting with Dangote, Ahmed, Gbenga Komolafe, CEO of NUPRC, and Mele Kyari, group CEO of NNPC, to resolve the dispute.