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The Nigerian National Petroleum Company Limited (NNPC) and the leadership of the Dangote Refinery have made notable progress in their three-week negotiations on domestic fuel supply.
The President of Dangote Group, Aliko Dangote, has now accepted to sell the refined petrol from his 650,000 barrels per day in Nigeria’s local currency, the Naira, as part of the agreements reached with the NNPC, stated Devakumar Edwin Vice President, Oil and Gas, Dangote Industries Limited.
He also mentioned that the NNPC had informed the management of Dangote Group of its intention to station a team of six to 10 people permanently at the USD 20 billion refinery. This team would be overseeing the production and buying back the products in Naira since the national oil company would be supplying the crude. He added that the request aligns with the NNPC’s aim to closely monitor the entire process, ensuring consistent crude supply and efficient processing while securing a steady flow of PMS for the country.
Providing further information on the production and commercial arrangements at the refinery, Edwin noted that the discussions with the NNPC revolved around a new model for crude supply where the refinery will buy crude from the government in Naira and sell PMS in the same currency, rather than in dollars. He noted that the negotiations were ongoing, with critical aspects like crude pricing and the Naira exchange rate yet to be finalised. According to Edwin, Aliko Dangote highlighted the critical need for foreign exchange and the deteriorating value of the Naira as key factors in his decision to proceed with the deal.
Edwin also expressed frustration over the seeming boycott of Dangote Refinery’s products by local marketers, revealing that despite the refinery’s efforts to supply affordable petroleum products, many traders in Nigeria have refused to purchase from the facility, preferring to continue importing refined products from abroad. But the Dangote Industries Limited (DIL) vice president stated that despite the refinery’s large production capacity, local marketers were only purchasing about 3 per cent of the output. According to him, the remaining 97 percent of the refinery’s production, including diesel and jet fuel, was being exported due to a boycott by local traders who refused to buy at the refinery’s lower prices.
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The refinery can produce up to 54 million liters of refined petroleum products per day, depending on crude oil supply, but lamented that local crude supplies had been inconsistent, forcing the refinery to rely on imported crude from countries like the US and Brazil. Edwin added that the situation was further worsened by International Oil Companies (IOCs) which prefer to prioritise foreign markets and selling crude oil at prices above the market rate. He disclosed that just 44 per cent production of the refinery was enough to meet Nigeria’s petroleum needs, while the rest could be exported.
