On Monday, reports surfaced that the Dangote refinery and other local refineries in Nigeria have not begun purchasing crude oil from the Nigerian National Petroleum Corporation Limited (NNPCL) in naira, despite a directive from President Bola Tinubu.
The Crude Oil Refiners Association of Nigeria (CORAN) revealed that individual refiners have written to NNPC requesting crude oil but have yet to receive any response.
The Federal Executive Council (FEC) recently approved President Tinubu’s proposal to sell crude to local refineries in naira, starting with the Dangote refinery as a pilot. This proposal aims to sell the 450,000 barrels meant for domestic consumption in naira, with a fixed exchange rate for the transaction’s duration.
Despite this initiative, the refiners reported no communication from NNPC nearly a week after the announcement.
Eche Idoko, the Publicity Secretary of CORAN, emphasized the need for the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) to initiate the process.
“We have not started buying crude from NNPC. Individual members have written to them (NNPC) already, and they have several requests from these refineries before them. Typically, we would expect our regulator, in this instance, the NMDPRA, to kickstart the process by calling for a meeting of all parties to discuss the framework for such supply or have NNPC respond to the various letters to it by the refineries requesting for crude,” Idoko noted.
Idoko praised President Tinubu for considering the interests of indigenous refiners but stressed the need for an executive order to enforce the directive. The refiners are also seeking a meeting with the economic team to establish a favorable rate for the Nigerian market.
“Yes, we will see a rebound in the pricing of fuel once the President’s order is implemented. Mind you, the pronouncement alone is not enough. It must be with a force of law, either by executive order or by incorporating it into a new guideline so that the crude producers will be bound to sell to us in naira,” Idoko stated.
The Dangote refinery and other domestic refiners have expressed ongoing challenges in accessing crude oil for their operations. The management of Dangote Group recently accused International Oil Companies (IOCs) of frustrating crude supply to its 650,000-barrel-capacity refinery.
The group alleged that IOCs prefer to sell crude oil through foreign agents, offering cargoes at $2 to $4 per barrel above the Nigerian Upstream Petroleum Regulatory Commission’s (NUPRC) official price, which in turn increases local crude prices.
Furthermore, the group claimed that foreign oil producers prioritize selling Nigerian crude to Asian countries.
A senior official at the Dangote refinery, who requested anonymity due to a lack of authorization to speak publicly, confirmed that the plant has not started buying crude in naira from NNPC.
Efforts to reach NNPC spokesperson Olufemi Soneye for comments were unsuccessful as he did not respond to inquiries.
The situation continues to develop as refiners and regulatory bodies work towards a resolution that could significantly impact the local fuel market and the strength of the naira.