There are growing concerns over the continued sustainability of the Naira-for crude deal which took effect on October 1, 2024.
Some online news platforms had on Monday reported the suspension of the Naira-for-crude deal to Dangote Refinery Limited by the Nigerian National Petroleum Company (NNPC) Limited.
On October 1, 2024, the Federal Government officially announced the commencement of crude oil sale to Dangote Refinery, and other local refineries in the local currency.
Minister of Finance and Coordinating Minister of the Economy, Wale Edun, had in a statement said the sale of crude oil to the 650,000 bpd refinery was initially approved by the Federal Executive Council (FEC) in July 2024 with transactions set to begin in October.
According to industry stakeholders, the Crude-for Naira policy will lead to reduced pressure on the Dollar and ensure the stability of the local currency.
But NNPC Limited in a clarification statement by its Spokesperson, Mr. Olufemi Soneye, on the Naira-for Crude contract between NNPC Limited and Dangote refinery said the contract expires at the end of March while discussions are ongoing towards emplacing a new deal.
The statement explained that the contract for the sale of crude oil in Naira was structureds as a six-month agreement, subject to availability.
NNPC further explained that under the arrangement, NNPC has made over 48 million barrels of crude oil available to Dangote refinery since October 2024, adding that in aggregate, NNPC has made over 84 million barrels of crude oil available to the Refinery since its commencement of operations in 2023.
“NNPC Limited remains committed to supplying crude oil for local refining based on mutually agreed terms and conditions.”
But a source close to the deal who pleaded not to be named said the performance of Dangote Refinery under the Naira-for crude deal has been abysmal over the six-month period of the policy. The source noted that while the agreement was for Dangote to inject 25 million litres of Premium Motor Spirit (PMS) into the domestic market in exchange for the crude from NNPC, the refinery has been struggling to meet the 25 million litres daily production. “On some days, the refinery will inject a paltry three million litres into the market and on some occasions 10 million litres. But overall, the refinery has not been consistent with its production numbers in line with the agreement signed under the Naira-for-crude deal.’’
In November 2024, Vice President of Dangote Industries Limited, Edwin Devakumar, accused NNPC of failing to meet its target under the Naira-for crude deal.
Under the deal, Dangote Refinery was expected to receive a minimum of 385,000 barrels per day from NNPC.
Devakumar characterized the volume of crude supplied by NNPC Limited as ‘’peanut,’’ though he did not specify the exact amount.
Publicity Secretary of Crude Oil Refiners Association of Nigeria (CORAN), the umbrella body of local refiners in Nigeria, Mr. Eche Idoko, in a telephone interview with Daily Sun yesterday, said the association has not received any official communication from NNPC on the suspension of the Naira-for-crude deal.
He noted that under the phase one policy which was meant for refineries producing petrol, Idoko said Dangote has performed well enough by boosting local refining capacity.
The deal has also helped to reduced pressure on the Naira while shoring up the value of the Naira against the Dollar, saying the local currency has been witnessing some gains in recent months.
He was upbeat that after the end of six month in March ending, he has no doubt that the deal would be extended for Dangote.
