THE Nigerian National Petroleum Company Limited and the Dangote Petroleum Refinery are wrapping up discussions on crude oil sales by NNPC to the Dangote refinery in naira and the buy-back of refined petroleum products from the $20bn plant in naira.
Parties in the deal may conclude discussions next week, the Vice President of Oil and Gas at Dangote Industries Limited, Devakumar Edwin, declared on Thursday during a space session organised by Nairametrics on X.
The Dangote official also revealed that oil marketers had continued to boycott the diesel and aviation fuel produced by the Lekki-based plant, stressing that they had also reported the refinery to President Bola Tinubu that the plant’s low-priced diesel was counter-productive to oil marketers’ businesses.
Edwin further revealed that NNPC had demanded to oversee the production of refined products at the Dangote refinery, based on the fact that the national oil company would supply crude to the plant.
In August 2024, this newspaper reported that the Federal Government disclosed that the sales of crude oil to Dangote refinery and other local refineries would commence on October 1, 2024.
The Minister of Finance and Coordinating Minister of the Economy, Wale Edun, announced this during a meeting with the Implementation Committee established to implement the decision.
“The Minister of Finance and Coordinating Minister of the Economy, Mr Wale Edun, today led the Implementation Committee meeting on the transition to crude oil sales in naira.
“The meeting reviewed progress on key initiatives, including the upcoming commencement of naira payments for crude oil sales to the Dangote Refinery starting October 1, 2024,” the finance ministry had stated in a post on its official X handle in August.
It also stated that the Executive Chairman of the Federal Inland Revenue Service, Dr Zacch Adedeji, and the Chairman of the Technical Sub-Committee reported that “The first PMS delivery from Dangote is expected next month (September) under existing agreements.”
Providing updates on this during the space session on Thursday, the Vice President at Dangote Industries, Edwin, noted that discussions were advancing on naira transactions for crude purchase and product buy-back.
Edwin said, “Now we are still discussing with the government to give us the crude in naira. The discussions have been going on. It has not yet been concluded. When we buy the crude from them in naira, they will take the products back from us in naira, that’s where we are. We are still in discussions.
“So now whatever we are producing, they will buy back from us. In fact, NNPC has told us they will have a team of six to 10 people permanently stationed inside our refinery. They even told us we should give them office space because they are going to give the crude.
“They are going to monitor the production and then they will buy it back in naira. So, this is where we are and we are waiting for the conclusion of the discussions. Hopefully, by next week, if it gets concluded, we can kick off.”
Edwin stated that the President of Dangote Group, Alhaji Aliko Dangote, was the one who insisted on dealing with the Nigerian government in naira because of the foreign exchange challenges confronting the country.
“When it came to petrol, we told the Presidency that if we were going to continue to import crude, our cost of production would be high and of course, our quality is very high. So, we will continue to export and manage the business. Then they sat with us and said, ‘Okay, we will try and give you crude allocation and you please produce and sell to us the products which you are producing out of the crude’. We said, yes.
“Then they said, can you sell it in naira? We said, no, we are a free zone company. We will be normally selling in dollars. They said, no, the country is in acute scarcity of dollars. So, please, we will supply the crude to you in naira. Sell the product to us in naira. Though internally, including me, some of us objected to the idea. My president clearly said we are going to accept this because the country is badly in need of foreign exchange.
“The currency value is dropping every day. Yes, I know I am going to take a loss because by the time we sell it in naira and convert it to dollars, (we are not even getting the dollars). By the time we convert, the currency may become weaker. So, we know he (Dangote) is going to lose. He said, I’m willing to take the loss in the interest of the country. I don’t mind, but the country is in bad shape. Somebody has to take certain risks. I’m willing to face the loss to whatever extent it is. So, that is how we agreed,” Edwin explained.
He also revealed that importers of petroleum products and marketers reported the Dangote refinery to President Tinubu after the refinery crashed the price of diesel.
According to him, over 95 per cent of petroleum product importers in Nigeria are not buying products from the Dangote refinery.
He said the refinery struggles to sell about 29 tankers of diesel per day due to low patronage from local petroleum product importers.