FG Unveils Naira-for-Crude Initiative with Dangote Refinery to Stabilize Fuel Prices

The federal government has announced that the Nigerian National Petroleum Corporation (NNPC) will begin supplying crude oil in Naira to the Dangote Petroleum Refinery within the next six months to implement the naira-for-crude initiative.

Following the directives of the Federal Executive Council, the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, announced that the naira-for-crude initiative will commence on the first of October, 2024, with 385,000 barrels per day (385kbpd).

Edun stated that as crude oil is sold in Naira to the Dangote refinery, the refinery, in return, will supply petrol (PMS) and diesel of equivalent value to the domestic market in Naira.

“Diesel will be sold in Naira by the Dangote refinery to any interested off-taker. PMS will only be sold to NNPC. NNPC will then sell to various marketers for now. All associated regulatory costs (NPA, NIMASA, etc.) will also be paid in Naira. We are also setting up a one-stop shop that will coordinate service provision from all regulatory agencies, security agencies, and other stakeholders to ensure smooth implementation of this initiative,” Edun reiterated.

Since the removal of the fuel subsidy in May 2023, fuel pump prices have fluctuated, leading to recurrent price increases in commodities.

In the same vein, the Crude Oil Refinery Owners Association of Nigeria and the Petroleum Retail Outlet Owners Association of Nigeria stated, “The details of this agreement are not yet known, but we hope the intricacies will be revealed to the public because this business is central to everything that happens in our economy. PMS is key, and the pricing of crude oil is important as it determines the price of the commodity.”

Furthermore, a representative from the Dangote refinery commended the government for the naira-for-crude initiative, describing it as a positive step toward stabilizing fuel prices.

By not purchasing crude oil in dollars, fuel prices will no longer be dependent on foreign exchange fluctuations, enabling price stability.

“Otherwise, the local crude would have been purchased from foreign-based traders who often mark up their prices, which has a significant effect on the cost of producing refined commodities, whether in Nigeria or elsewhere,” the official stated.