The Dangote Petroleum Refinery has begun receiving crude oil under Nigeria’s new naira-for-crude arrangement with the Nigerian National Petroleum Company Limited (NNPCL).
Officials confirmed that four cargoes of crude oil have been delivered within the past three weeks, marking the launch of this initiative aimed at boosting local refining capacity.
This agreement allows the refinery to pay for crude oil in naira rather than foreign currency, aligning with the Federal Government’s strategy to enhance domestic petroleum production.
The refinery, which has a capacity of 650,000 barrels per day, encountered initial crude supply challenges after starting operations.
Despite intervention from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), these issues persisted.
President Bola Tinubu proposed selling crude to local refineries in naira during a Federal Executive Council (FEC) meeting in July 2024.
The FEC adopted this policy as part of an effort to stabilize fuel prices and strengthen local refining.
The initial phase of the agreement will last six months, with possible extensions based on government review.
Operators have suggested that pegging the exchange rate at ₦1,000 per dollar could reduce Premium Motor Spirit (PMS) prices, benefiting the local market.
However, it remains unclear whether the Federal Government has fixed the exchange rate for the current deal.
The initiative signals a shift in Nigeria’s approach to managing its hydrocarbon resources by encouraging local refining to meet domestic needs.
CREDIT: Allneeds, PUNCH
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