The Nigerian National Petroleum Company (NNPC) has expressed interest in securing a permanent presence at the Dangote Refinery in Lagos, as part of a proposed crude oil supply deal, Devakumar Edwin, vice president of Dangote Industries Limited has said.
“NNPC has informed us that they intend to station a team of 6 to 10 people permanently at our refinery. They’ve asked us to provide office space for them since they will be supplying the crude, overseeing the production, and buying back the products in Naira,” Edwin said in a Twitter Spaces session organised by Nairametrics.
Edwin explained that talks with the NNPC are focused on a new crude supply model, in which the refinery would purchase crude from the government in Naira and sell PMS in the same currency, instead of using dollars.
He said that negotiations are still in progress, with key issues such as crude pricing and the Naira exchange rate yet to be settled.
“We are still in talks with the government about receiving crude in Naira. The discussions are ongoing, and nothing has been finalized yet. Some unresolved issues include the pricing of crude, the pricing mechanism, and determining the appropriate exchange rate for the Naira,” he said.
This change represents a major shift from the refinery’s initial business model as a free zone entity, which was intended to conduct transactions in dollars.
Edwin said that Aliko Dangote agreed to the federal government’s suggestion to sell NNPC products to the government in Naira, even though this could result in financial losses.
According to Edwin, Dangote said the critical need for foreign exchange and the deteriorating value of the Naira as key factors in his decision to proceed with the deal.
“Dangote intervened and said, ‘We are going to accept this because the country desperately needs foreign exchange, and the value of the Naira is deteriorating every day. I understand that I am going to take a loss – because, by the time we sell the product and convert it to dollars, the exchange rate may have worsened.’”
Edwin stated that in his commitment to the national cause, Dangote added, “I am willing to take this loss in the interest of the country. I don’t mind, the country is in bad shape. Someone has to take certain risks, and I am ready to face this loss, no matter how significant it may be.”