The Nigeria National Petroleum Company Ltd (NNPCL) has stated that the sales of petrol in Naira by the Dangote refinery will begin from October 1st, 2024.
This was disclosed in a statement signed by the NNPCL Spokesperson, Olufemi Soneye where the pump prices of petrol in different states were released.
According to the NNPCL, the current distribution of petrol from the Dangote refinery was priced in dollars as crude oil was supplied to the firm before the Naira agreement was reached.
It stated, “The NNPC Ltd can confirm that it is paying Dangote Refinery in USD for September 2024 PMS offtake, as Naira transactions will only commence on October 1st, 2024.”
The federal government has already set up a technical committee to work out the mechanism of the Naira transaction of products from the Dangote refinery to the NNPCL.
Naira sales of crude oil to reduce FX demand by 40%
Alhaji Aliko Dangote, President of the Dangote Group, has revealed that the Federal Executive Council’s (FEC) decision to supply crude oil to the Dangote Refinery in local currency will significantly reduce Nigeria’s foreign exchange demand.
According to Dangote, this strategic move could slash foreign exchange needs by at least 40%, easing pressure on the country’s reserves.
He said, “I want to personally also thank Mr. President for creating this idea of Naira for Crude and also Naira for the product. This will give a lot of stability for the Naira because you remove 40% of the demand for the dollars in the market. That’s not only it.”
Backstory
In July, Nairametrics reported the Federal Executive Council’s (FEC) approval of President Bola Tinubu’s proposal to sell crude oil to Dangote Refinery and other upcoming refineries in naira.
- The decision marks a significant shift, as the 450,000 barrels of crude earmarked for domestic consumption will now be sold to Nigerian refineries in local currency, with Dangote Refinery serving as the pilot for this initiative.
- Under the new directive, the exchange rate for the transaction will be fixed for the agreement’s duration. Afreximbank, alongside other Nigerian settlement banks, will facilitate the trade between Dangote Refinery and NNPC Limited.
- The move is geared at removing the reliance on international letters of credit and is expected to save Nigeria billions of dollars currently spent on importing refined fuel.
- Following the approval of the Federal Executive Council (FEC), the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) has finalized an agreement with the Nigerian National Petroleum Corporation (NNPC) Limited to sell crude oil to Dangote Refinery in the local currency, naira.
NMDPRA also confirmed that Dangote Refinery has commenced petrol production, with an expected output of 25 million litres of petrol in September.
