Alhaji Aliko Dangote the CEO of Dangote Group and Group Managing Director of NNPC Mele Kyari
Dangote, NNPCL back to negotiation over Naira-for-crude deal
The Nigerian National Petroleum Company Limited (NNPCL) on Monday said discussions are currently ongoing towards emplacing a new naira-for-crude contract with local refiners.
The company reacted after the reported collapse of the naira for crude deal between the NNPCL and the local refiners, prompting marketers, stakeholders and Nigerians to express mixed feelings.
The deal, which lasted barely six months, was said to have collapsed, raising fear of increase in prices of petroleum products and further depreciation of naira against the dollars.
Newstrends reports that President Bola Ahmed Tinubu had directed the sale of crude oil to Dangote in naira as part of move to bring down the cost of premium motor spirit (pms) otherwise known as petrol.
In October 2024, the Federal Executive Council (FEC) approved that 450,000 barrels intended for domestic consumption be offered in Naira to Nigerian refineries, with the Dangote Refinery acting as a pilot project.
But findings by our correspondent indicated that the deal which was signed in October 2024 and is expected to lapse at the end of March 2025 might have collapsed.
Sources said this was due to “irreconcilable” differences bothering on product delivery and other issues.
Daily Trust reports that under the scheme which commenced in the first week of October 2024, the NNPCL was expected to supply 385,000 barrels of crude oil to the 650,000 bdp Dangote Refinery located in Ibeju-Lekki Lagos.
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However, findings showed that there has been a consistent low supply of allocations to Dangote Refinery, forcing it to resort to importation.
Daily Trust earlier reported that there has been a sharp decline in the volume of crude allocated to the Naira-for-Crude scheme.
A document reviewed late January indicated that for February 2025, the scheme has been allocated only four cargoes, and for March, just two cargoes totalling 950,000 barrels (1.9 million barrels in total for the month). This represents an allocation of 61,290 barrels per day – far below the 385,000 bpd target under the scheme.
The shortfall has left Dangote Refinery with no option than to import crude oil from outside Nigeria. It recently received 12 million barrels of crude oil from the United States.
There was no official comment yet from Dangote on the reported collapse of the naira for crude deal but a source close to the refinery confirmed that it is true. He did not provide further clarification.
But the NNPC Limited while clarifying the development said it has noted recent reports circulating on social media regarding the alleged unilateral termination of the crude oil sales agreement in Naira between NNPC and Dangote Refinery.
Chief Spokesperson of the NNPC, Olufemi Shoneye said, “To clarify, the contract for the sale of crude oil in Naira was structured as a six-month agreement, subject to availability, and expires at the end of March 2025.
“Discussions are currently ongoing towards emplacing a new contract. Under this arrangement, NNPC has made over 48 million barrels of crude oil available to Dangote Refinery since October 2024. In aggregate, NNPC has made over 84 million barrels of crude oil available to the Refinery since its commencement of operations in 2023.
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“NNPC Limited remains committed to supplying crude oil for local refining based on mutually agreed terms and conditions…”
Experts, Nigerians lament collapse of deal
There are concerns among Nigerians, experts and marketers over the negative implication of the deal on fuel supply and the local currency.
They said the arrangement ordered by the president was responsible for the relative stability recently recorded in the foreign exchange. They said the development would further trigger depreciation of the naira resorting to an increase in prices of petroleum products.
A petroleum industry player, Akinrinade Akinade in a chat with our correspondent warned that the development would affect the prices of petroleum products.
He called for the intervention of President Tinubu who initiated the scheme in the first place.
He said, “I read it like you. It has not been confirmed yet. It was the President that ordered the NNPC to do it. It is not final.”
According to him, the scheme was felt largely “in the value of naira to dollar.”
“It was one of the reasons the dollar had some air space. If that one changes, we might see another devaluation of the naira because the refineries would have to be looking for dollars to source their crude. This will also affect the price of petroleum products,” he said.
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