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There is considerable uncertainty regarding the launch of the Naira-for-Crude Policy, which was set to commence on October 1, 2024.
It has been observed that the Nigerian National Petroleum Company Limited (NNPCL) has not initiated the supply of crude oil in naira to the Dangote Petroleum Refinery, even though the planned start date was October 1, 2024. As of Thursday, October 3, there has been no commencement of the supply.
Officials from the Dangote refinery, the Nigerian Upstream Petroleum Regulatory Commission, the Federal Ministry of Finance, and NNPC have not provided any updates regarding the naira-for-crude agreement when approached for comments.
On Monday, it was reported that the Technical Sub-Committee on Domestic Sales of Crude Oil in Local Currency had confirmed that the supply of crude oil in naira by NNPC to the Dangote refinery was set to begin on Tuesday, October 1, 2024.
The committee had previously announced on September 13, 2024, that the Federal Executive Council, led by President Bola Tinubu, approved the sale of crude to local refineries in naira, along with the purchase of petroleum products in the same currency.
The committee stated, "Starting October 1, NNPC will supply approximately 385,000 barrels per day of crude oil to the Dangote refinery, with payments made in naira." Zacch Adedeji, who is also the Chairman of the Federal Inland Revenue Service, leads the Technical Sub-Committee.
Mr. Dare Adekanmbi, the Special Adviser on Media to the FIRS Chairman, confirmed on Sunday that the plan for crude oil supply to the $20 billion Lekki-based facility remains on track. "I can confirm that Zacch Adedeji is diligently working to ensure the implementation of the agreement as planned, which is crucial for the benefit of Nigerians," Adekanmbi stated.
However, on Thursday, reliable sources from three domestic refineries indicated that they were unaware of whether the deal had actually commenced.
NNPC officials did not respond when approached for updates regarding the deal, instead directing our correspondent to the Ministry of Finance for further information. The finance ministry also failed to provide any answers upon inquiry.
A senior representative from a domestic refinery indicated that crude oil refiners, including Dangote, are still waiting for the Federal Government to supply crude oil in naira. The official mentioned that the government, through its crude-for-naira committee, had assured stakeholders that significant efforts were underway to fulfill the agreement.
“It was supposed to commence on October 1, and the technical committee is currently overseeing the process. They are expected to reach a specific agreement and relay that information to us. However, as of now, we have not received any communication. We are still in a holding pattern,” the operator, who requested anonymity due to a lack of authorization, remarked.
Another source from a prominent modular refinery, familiar with the negotiations, stated, “The body representing crude oil refiners in Nigeria has yet to receive any updates regarding the deal. We are awaiting official communication, as just last week, we were assured by the government that the agreement remains on track.
“Nonetheless, I must emphasize that agreements of this nature often take time to finalize. Numerous factors need to be addressed before a conclusive decision can be made. Therefore, we must remain patient,” the source added.
In September, the government clarified that the naira-for-crude initiative aims to alleviate pressure on the naira, eliminate unnecessary transaction costs, and enhance the availability of petroleum products nationwide.
“Since then, the implementation committee, led by the Minister of Finance, along with the technical committee, has been diligently collaborating with NNPC and Dangote refinery to develop the details for executing the FEC approval,” Adedeji noted.
The committee chairman and FIRS head announced that starting October 1, crude oil will be sold to Dangote in naira. In exchange, the Dangote refinery will provide petrol (PMS) and diesel of equivalent value to the domestic market, also payable in naira.
The refinery will offer diesel in naira to any interested buyers, while PMS will be exclusively sold to NNPC, which will then distribute it to various marketers for the time being. All related regulatory fees, including those from NPA and NIMASA, will also be settled in naira.
Additionally, a centralized service hub is being established to coordinate efforts among regulatory bodies, security agencies, and other stakeholders to facilitate the effective rollout of this initiative.
Adedeji further noted that the technical committee responsible for developing this initiative will evolve into an implementation and monitoring committee, operating out of Lagos for the next three to six months.