The Nigerian National Petroleum Company Ltd (NNPC) has taken significant steps towards procuring petrol from the Dangote Refinery and Petrochemical Company Ltd, starting Sunday, September 15.
In an exclusive report by THE WHISTLER, NNPC has mobilized 500 trucks to the refinery to facilitate the transportation of 25 million liters of petrol under the “naira for crude” sales agreement.
This move aims to ensure the distribution of petrol to oil marketers at competitive prices for the Nigerian market. NNPC also secured a $100 million Letter of Credit to settle its payment obligation to Dangote Refinery for this batch of fuel.
A source familiar with the transaction explained that the payment is in dollars because the crude used for refining the petrol was purchased in the same currency. The source added, “NNPC has mobilized 500 trucks and raised $100 million in LC to truck out 25 million liters of petrol from Dangote Refinery. NNPC has also notified the NMDPRA that petrol imports will stop from October if prices remain competitive.”
From October 1, 2024, NNPC will supply 385,000 barrels of crude oil per day to the Dangote Refinery, with payments made in Naira. In exchange, the refinery will provide petrol (PMS) and diesel of equivalent value, also in Naira. Diesel will be sold to any interested offtaker, while petrol will initially be distributed exclusively by NNPC to oil marketers. Regulatory fees from agencies like the Nigerian Ports Authority and NIMASA will also be paid in Naira.
THE WHISTLER’s investigation revealed that NNPC has asked the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) to validate production figures in preparation for halting fuel importation from October. Based on domestic refinery forecasts, 389.16 million liters of PMS are expected for September, with production projected to reach 1.09 billion liters in October, 1.08 billion liters in November, and 1.45 billion liters in December.
For the first quarter of 2025, projected fuel production is expected to rise to 1.47 billion liters in January, 1.34 billion liters in February, and 1.47 billion liters in March.
Following a directive from the Coordinating Minister of Economy during a recent committee meeting on the naira-for-crude deal, NNPC has not placed any petrol import orders for October and beyond.
In June, THE WHISTLER reported that the government had agreed to make 450,000 barrels of crude available for local refineries in exchange for naira, with Dangote Refinery leading the initiative. Last week, it was revealed that NNPC had allocated 19 crude oil cargoes to the Dangote Refinery, with six earmarked for September and an additional 13 for October.
This follows the Federal Executive Council’s (FEC) approval under President Bola Tinubu to sell crude oil to local refineries in Naira, with corresponding purchases of refined petroleum products also in the local currency. The initiative aims to reduce pressure on the Naira, cut transaction costs, and boost the availability of fuel in Nigeria.
The implementation committee, led by Finance Minister Wale Edun, alongside NNPC and Dangote Refinery, has been working to finalize the details for the execution of this policy.
