The agreement for the sale of crude oil in Naira to Dangote and other local refineries has not been suspended, the Nigerian National Petroleum Company Limited and the Federal Executive Council Initiative on Domestic Sales of Crude Oil and Refined Products in Naira have said.
Both the NNPC Ltd and the Technical Sub-Committee of the initiative on Monday debunked reports about the alleged unilateral termination of the deal introduced on October 1 2024 by the Federal Government to allow local refiners of petroleum products purchase crude oil feedstock in Naira rather than dollars.
The initiative was to encourage domestic refining capacity, reduce dependence on imported petroleum products, and help strengthen the Naira against the dollar at the money market, thus reducing the pressure on the country’s foreign exchange reserves.
Some of the reports which highlighted the implications of the alleged policy somersault said it would not only impact the capacity of the Dangote and other refineries to source for crude oil for their operation, their resort to international crude oil suppliers and paying in dollars would impact their operational costs, resulting in further hike in the retail pump price in the country.
But, in a swift reaction, the NNPC Ltd clarified that the agreement was not suspended, as the contract structured as a six-month agreement, subject to availability, expired by the end of March 2025.
“Discussions are currently ongoing towards emplacing a new contract,” the spokesperson of the NNPC Ltd., Femi Sonoye, said in a statement in Abuja on Monday.
In reviewing the policy over the last six months, Mr Sonoye said under the crude oil supply in Naira arrangement, the NNPC supplied over 48 million barrels of crude oil to Dangote Refinery since October 2024.
He said in overall aggregate, the NNPC supplied over 84 million barrels of crude oil to the Refinery since its commencement of operations in 2023.
“The NNPC Limited remains committed to supplying crude oil for local refining based on mutually agreed terms and conditions,” Sonoye added.
Also reacting, the Chairman of the Technical Sub-Committee in charge of the Federal Executive Council Initiative on Domestic Sales of Crude Oil and Refined Products in Naira, Zacch Adedeji, debunked reports suggesting the discontinuation of the deal, which allegedly forced local refineries to turn to international crude purchases for their operations.
“These reports do not reflect the realities of the ongoing work under the Federal Executive Council Initiative on Domestic Sales of Crude Oil and Refined Products in Naira,” Mr. Adedeji, who is also the Chairman of the Federal Inland Revenue Service (FIRS) said.
He said as driver of the implementation of the crude oil supply in Naira initiative, the committee confirmed that the Naira-based domestic sales framework remains in place.
“There has been no decision at the policy level to discontinue this approach, nor is it being considered,” Adedeji assured.
“After implementing the policy for some months, evidence abounds that it is the right way to go and it will continue to help the economy,” he added.
He said local refineries have not been excluded from domestic crude supply, adding that the engagement process for the structured agreements for crude oil supply to domestic refineries remains in place, by balancing factors such as availability, demand, and market conditions.
“There is no exclusion of local refineries from access to domestic crude. The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) is actively ensuring compliance with the Domestic Crude Oil Obligations provisions of the Petroleum Industry Act (PIA).
Adedeji said the Committee would continue to work on strengthening the implementation of the crude oil supply in Naira initiative, which supports competitive pricing and market efficiency.
“We remain committed to ensuring the efficient execution of this initiative in line with its core objectives – enhancing local refining, reducing foreign exchange exposure, and stabilising the domestic fuel supply,” he said.
