…Signs MoU to sell crude to Dangote in Naira
…As Dangote Refinery begins shipment of pms to local market
By Cyril Ogar
Nigerian National Petroleum Corporation ,NNPCL, filling stations in Lagos have adjusted the price of petrol to N855 amid ongoing fuel scarcity, our correspondent has confirmed.
AljazirahNigeria observed Tuesdaymorning that some NNPC retail stations in Lagos are selling fuel between N865 to N897 per litre from N568 per liter. Â
This is coming after the recent admission by the NNPC that its capacity to supply petrol to local marketers is jeopardized by its debt obligations to international oil traders amounting to approximately $6 billion.
In the past few weeks, fuel queues have been a common sight in major cities across Nigeria, leaving citizens struggling to obtain fuel.
“NNPC Ltd has acknowledged recent reports in national newspapers regarding the company’s significant debt to petrol suppliers. This financial strain has placed considerable pressure on the Company and poses a threat to the sustainability of fuel supply.
“In line with the Petroleum Industry Act (PIA), NNPC Ltd. Remains dedicated to its role as the supplier of last resort, ensuring national energy security. We are actively collaborating with relevant government agencies and other stakeholders to maintain a consistent supply of petroleum products nationwide”, Soneye said.
Fuel scarcity has returned to major cities like Lagos and Abuja, with vehicles seen queuing at the few filling stations selling petrol.
This comes as NNPC denies owing oil traders a $6.8 billion fuel subsidy debt, which some believe is contributing to the supply challenges.
Major roads in Lagos and Abuja were noticeably empty, as observed by our correspondent, due to motorists lacking petrol to move around.
Even NNPCL operated filling stations were completely shutdown, with some motorists waiting in front, hoping the stations would eventually open.
The product was sold yesterday at prices ranging from N840 to N1,000 at various locations across the country.
In a related development, 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%.
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.
The Federal Executive Council had in July 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 Limited ,NNPCL, will commit to supplying four of these cargoes.
Meanwhile, Dangote Refinery has commenced roll out its first shipment of Premium Motor Spirit ,PMS, commonly known as petrol, AljazirahNigeria has confirmed.
The refinery, with a capacity of 650,000 barrels per day, has successfully completed its testing phase and is now ready to introduce its products to the local market.
This development is anticipated to provide much-needed relief to Nigerians who have been grappling with severe petrol shortages in various towns and cities across the country.
Insider sources stated that the Nigerian National Petroleum Corporation Limited, NNPCL, will be the initial purchaser of Dangote’s products, with NNPC officials already stationed at the Lagos petrochemical plant to take delivery.
Aliko Dangote, the CEO of the refinery, is present at the plant today to witness the grand unveiling of the petroleum products following months of delays and glitches.
It’s worth noting that that NNPC is expected to be the exclusive buyer of Dangote’s products due to its current challenges in meeting international debt obligations to global oil traders.
The rollout of petrol by Dangote Refinery marks a historic milestone in Nigeria’s oil and gas sector, as the country, which has long relied on petrol imports, takes a significant step towards self-sufficiency.
With a production capacity that not only meets domestic demand but also allows for exports to neighbouring countries, Dangote Refinery is poised to end Nigeria’s dependence on imported petrol.
Credible reports indicate that Nigeria currently consumes about 35 million liters of petrol daily, while Dangote Refinery, once fully operational, can produce at least 100 million liters per day.
Although the refinery has faced various challenges and delays in the past, including supply issues with the NNPCL and international oil companies ,IOCs. These issues were eventually resolved through the intervention of the Nigerian Upstream Petroleum Regulatory Commission ,NUPRC, and other key stakeholders.
The Federal Executive Council ,FEC, further supported the project by offering an arrangement that allows Dangote Refinery to purchase crude oil in local currency and sell petrol in the same currency, thereby easing pressure on the foreign exchange market.
As Dangote Refinery begins rolling out petrol today, with shipments expected to reach the local market in the coming days, Nigeria is set to transition from being solely a crude oil producer to a nation with potential energy security and independence.
Additionally, the refinery’s production of petroleum products signals the complete deregulation of the downstream sector, paving the way for a more robust and competitive market.
