Crude Sale In Naira: NNPC, Dangote Finalize Product Buy-Back Deal

Crude Sale In Naira: NNPC, Dangote Finalize Product Buy-Back Deal

The Nigerian National Petroleum Company Limited (NNPC) and Dangote Petroleum Refinery are nearing the conclusion of discussions about a crude oil sales agreement where NNPC will sell crude oil to Dangote Refinery in naira, and the refinery will sell refined petroleum products back to NNPC, also in naira.

Devakumar Edwin, the Vice President of Oil and Gas at Dangote Industries, disclosed on Thursday, during a Nairametrics space session on X, that both parties could finalize talks next week. He also revealed that oil marketers have continued to avoid purchasing diesel and aviation fuel from the refinery, complaining to President Bola Tinubu that Dangote’s low diesel prices are disrupting their businesses.

Additionally, Edwin shared that NNPC had requested to oversee the refinery’s production, as it plans to supply crude to the facility. He noted that a team from NNPC will be stationed at the refinery to monitor production and manage the buy-back of products in naira.

In August 2024, it was reported that the Federal Government planned to begin selling crude oil to Dangote and other local refineries by October 1, 2024. This transition to naira-based sales was confirmed by the Minister of Finance, Wale Edun, during an implementation committee meeting, with the first refined products delivery from Dangote expected in September.

Edwin clarified that the decision to conduct transactions in naira was driven by Dangote Group’s willingness to help the Nigerian economy amid a foreign exchange crisis. Although some within the company were initially opposed, Aliko Dangote insisted on accepting the arrangement, acknowledging that the company would take a financial hit due to naira’s depreciation but was willing to take the loss for the country’s benefit.

Meanwhile, Edwin revealed that despite Dangote’s attempts to offer competitive diesel prices, petroleum marketers are boycotting the refinery’s products, leading to a shift toward exporting the refined goods instead. The marketers even wrote to President Tinubu, complaining about the price reductions, which they claim are harming their businesses.

Currently, the refinery is underutilized, with local marketers choosing not to lift the products, forcing the refinery to export diesel and aviation fuel. Edwin expressed disappointment at these challenges but confirmed that Dangote remains committed to producing for the local market if the situation improves.