Table of Contents
Key Points
- NNPC will begin selling crude oil in naira to Aliko Dangote’s refinery starting Oct. 1, 2024, as announced by the federal government.
- Key agencies will oversee the transition to Naira payments for crude oil, with production increases expected at Dangote’s refinery from November 2024.
- The Dangote Refinery will receive four initial cargoes of crude under a new agreement, with a total of 15 cargoes planned annually.
The Nigerian National Petroleum Corporation (NNPC) is set to commence the sale of crude oil to Africa’s richest man, Aliko Dangote’s Dangote Oil Refinery, in naira starting from Oct. 1, 2024, according to an announcement made by the federal government.
This was announced by Minister of Finance and Coordinating Minister of the Economy Wale Edun during a recent meeting of the Implementation Committee. The session aimed to review the progress of critical initiatives, including the transition to naira payments for crude oil.
Naira crude oil transition; Dangote Oil Refinery production set to surge
The Finance Ministry official X (formerly Twitter) account highlighted that the meeting focused on assigning roles to various stakeholders. Key agencies involved include the Nigerian Midstream and Downstream Petroleum Regulatory Authority, Central Bank of Nigeria, Nigerian Upstream Petroleum Regulatory Commission and the African Export-Import Bank. Their roles are crucial in ensuring the smooth implementation of the new payment scheme.
“The Minister of Finance and Coordinating Minister of the Economy, Wale Edun, today led the Implementation Committee meeting on the transition to crude oil sales in naira,” the post read. “The meeting reviewed progress on key initiatives, including the upcoming commencement of naira payments for crude oil sales to the Dangote Refinery starting Oct. 1, 2024.”
Zacch Adedeji, executive chairman of the Federal Inland Revenue Service, along with the chairman of the Technical Sub-Committee, reported that the first delivery of Premium Motor Spirit (PMS) from Dangote is expected next month, under the terms of existing agreements. Updates on the Port Harcourt and Dangote Refineries were also provided, indicating significant production increases anticipated from November 2024.
Edun emphasized the importance of transparency and instructed the Technical Sub-Committee to finalize details and prepare a report for the President, ensuring that directives are implemented as planned from September.
Dangote Oil Refinery to receive initial Crude cargoes under new agreement
Located near Lagos, the Dangote Petrochemical Complex is a major milestone in Nigerian industrial development, featuring a one-million-metric-tonne-per-year polypropylene plant and two large fertilizer trains with a combined annual capacity of three million tonnes of urea.
President Bola Tinubu’s directive last month to transition NNPC’s crude oil sales to the $20-billion refinery in Naira aims to stabilize fuel prices and the dollar-Naira exchange rate. This policy, endorsed by the Federal Executive Council (FEC), is intended to address fuel fluctuations and reduce pressure on the Naira.
Under the new agreement, the Dangote Refinery, which requires 15 cargoes of crude annually at a cost of $13.5 billion, will initially receive four cargoes from NNPC. The FEC’s approval also includes offering 450,000 barrels, designated for domestic use, in Naira as part of a pilot project.
