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 local currency, the naira.
This is contained in a statement by NMDPRA on Tuesday in Abuja following the commencement of petrol production by Dangote refinery.
This development is in line with the recent approval by the federal executive council (FEC) to sell crude oil to Dangote refinery in Naira as well purchase petrol products from the refinery in the local currency.
NMDPRA also confirmed that Dangote has begun petrol production, adding that the refinery will produce 20 million liters of petrol in September.
“At the NMDPRA headquarters in Abuja, NNPCL reach an agreement to commence crude oil sale and supply to Dangote Refinery in local currency.
“The refinery is now poised to supply an initial 25 million litres of PMS into the domestic market this September. And will subsequently increase this amount to 30 million liters daily from October 2024,” NMDPRA said.
Deal to reduce pressure on foreign exchange by 40 Percent
In another statement, the CEO of Dangote Refinery, Aliko Dangote, said the deal to sell crude oil to his refinery in naira by president Bola Tinubu will reduce pressure on foreign exchange by at least 40%.
The CEO expressed a heartfelt gratitude to President Bola Tinubu and his administration for providing such strategy in ensuring energy security in the country.
“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 of the dollars in the market. That’s not only it.
“Today’s discussion is only to thank God almighty for bringing us into this period of now producing gasoline. I know that a lot of people think we won’t be able to deliver. But we’ve been able to deliver,” Dangote said.
Backstory
Nairametrics previously reported on July 29 that the Federal Executive Council approved President Tinubu’s proposal to stop NNPC from selling crude oil to local refineries in foreign currency.
The Council decided that the 450,000 barrels designated for domestic use would be sold in Naira to Nigerian refineries, starting with Dangote Refinery as a pilot.
This measure aims to stabilize both the pump price of refined fuel and the dollar-naira exchange rate.
A current report indicates that Dangote Refinery requires 15 cargoes of crude oil annually.
The Nigerian National Petroleum Corporation (NNPC) will commit to supplying four of these cargoes.