Naira-for-crude deal starts Tuesday as Nigerians anticipate lower fuel prices

The Nigerian government is set to begin supplying crude oil in Naira to the Dangote Refinery starting Tuesday, October 1, 2024, in an effort to reduce the cost of Premium Motor Spirit (petrol).

This initiative, confirmed by Dare Adekanmbi, spokesperson for the Chairman of the Technical Sub-Committee on Domestic Sales of Crude Oil, follows a Federal Executive Council approval under President Bola Tinubu.

The agreement involves the Nigerian National Petroleum Company Limited (NNPC) supplying approximately 385,000 barrels per day (bpd) of crude oil to the refinery, equating to about 11.5 million barrels monthly.

In exchange, the Dangote Refinery will release equivalent amounts of refined diesel and petrol to the domestic market, also priced in Naira.

Zacch Adedeji, the Chairman of the Sub-Technical Committee, emphasized the importance of implementing this agreement for the benefit of Nigerians. He stated, “We are working diligently to ensure everything proceeds as planned.”

However, Eche Idoko, the Publicity Secretary of the Crude Oil Refinery-owners Association of Nigeria, urged that the Naira-for-crude initiative should extend beyond the Dangote Refinery to include other modular refineries across the country. “The committee is only discussing with Dangote at the moment,” he noted.

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Experts predict that selling crude oil in Naira will significantly impact petrol prices, which currently range from N950 to N1,100 per litre following recent adjustments by the NNPC.

Billy Gillis-Harry, National President of the Petroleum Products Retail Outlets Owners Association of Nigeria, expressed optimism, stating, “When crude oil is sold to refineries in Naira, we expect a drop in petrol prices.”

The anticipated shift to a Naira-based transaction system comes amid ongoing discussions regarding the pricing of Dangote petrol, which has remained undisclosed despite calls from House of Representatives members for transparency.

Aliko Dangote, President of the Dangote Group, recently claimed that his petrol is cheaper than imported alternatives, but specific pricing details are yet to be revealed.

As the government rolls out this initiative, all eyes will be on the domestic market’s response and the potential relief for consumers grappling with high fuel costs.