Naira-for-Crude Deal Set to Commence on Tuesday

Naira Crude Sale to Dangote Refinery Begins October 1

The Nigerian National Petroleum Company Limited (NNPC) will start supplying crude oil in naira to the Dangote Petroleum Refinery from October 1, 2024, following a government policy allowing local refineries to buy crude oil and sell petroleum products in the same currency. NNPC plans to provide around 385,000 barrels per day (bpd) to the refinery, which will reciprocate by supplying equivalent amounts of refined diesel and petrol, also in naira.

This initiative aims to alleviate pressure on the naira, lower transaction costs, and enhance the availability of petroleum products in Nigeria. While the Dangote refinery can sell diesel to various buyers, petrol will be sold exclusively to NNPC for distribution. All regulatory costs will also be in naira.

To facilitate the implementation, a one-stop shop will coordinate services from relevant regulatory and security agencies, with a new committee set up to oversee the initiative for the next three to six months. Modular refineries are interested in participating, as many are currently struggling with crude supply issues.

There is hope that this naira-based sales approach will lower petrol prices, although the Dangote refinery has not yet announced pricing. The Federal Government will not intervene in pricing disputes, reflecting the deregulated nature of the petroleum sector.