Progress on the directive issued by President Bola Tinubu for the Dangote Petroleum Refinery and other local refineries to purchase crude oil in naira has not yet materialized.
Reports indicate that the $20bn plant and other Nigerian refineries are yet to commence procuring crude oil from the Nigerian National Petroleum Company Limited in naira, as directed by Tinubu last week.
The Crude Oil Refiners Association of Nigeria has stated that despite individual refiners sending letters to NNPC requesting crude oil, there has been no response received as of now.
The Federal Executive Council recently approved Tinubu’s proposal to sell crude oil to the Dangote refinery and other upcoming refineries in naira.
As per the FEC’s approval, 450,000 barrels designated for domestic usage will be offered in naira to Nigerian refineries, with the Dangote refinery being the pioneer recipient. A fixed exchange rate will be applied for the duration of this transaction.
However, nearly a week after the announcement, the refiners have not heard back from NNPC.
Eche Idoko, the Publicity Secretary of the Crude Oil Refiners Association of Nigeria, mentioned that they are anticipating the Nigerian Midstream and Downstream Petroleum Authority to initiate the process.
According to Idoko, “We have yet to commence the purchase of crude from NNPC. Individual members have already reached out to them, and NNPC has multiple pending requests from these refineries.
Ideally, we would expect our regulator, in this case, the NMDPRA, to start the process by convening a meeting of all involved parties to discuss the supply framework, or have NNPC address the refineries’ requests for crude,” Idoko highlighted.
The CORAN spokesperson had earlier emphasized that supplying crude oil to local refineries in naira would reduce petrol costs and bolster the naira against the dollar.
Idoko praised Tinubu for heeding the indigenous refiners’ concerns but suggested that an executive order should be issued to implement the new directive.
The crude oil refiners have also expressed the need for a meeting with the economic team to determine a favorable rate for the Nigerian market.
Idoko remarked, “We anticipate a positive impact on fuel pricing once the President’s order is enforced. However, a mere announcement is insufficient. It must carry the weight of law, either through an executive order or by incorporating it into a new guideline, so that the crude producers are obliged to vend to us in naira.”
Dangote refinery and other local refiners have been facing challenges in accessing crude oil for their operations. The Dangote Group recently asserted that IOCs were hindering the crude supply to the 650,000-capacity refinery.
The group alleged that IOCs insisted on selling crude oil to its refinery via their foreign agents, causing the local crude price to escalate as trading arms offered cargoes at $2 to $4 per barrel above the NUPRC official price.
Moreover, the group claimed that foreign oil producers appeared to prioritize Asian countries for selling the crude extracted in Nigeria.
A senior official at the Dangote refinery, who declined to be identified due to lack of authorization to comment, confirmed that the plant had not yet initiated the purchase of crude in naira from NNPC.
NNPC spokesperson, Olufemi Soneye, did not respond to inquiries regarding the matter when approached by our correspondent.