Naira-for-crude deal fails to take off

There are indications that the supply of crude oil in naira by the Nigerian National Petroleum Company Limited to the Dangote Petroleum Refinery which should have started on October 1, 2024, has yet to begin as of Thursday, October 3.

Officials at the Dangote refinery and those at the Nigerian Upstream Petroleum Regulatory Commission, Federal Ministry of Finance, and NNPC, among others, stayed mute when contacted for updates on the naira-for-crude deal between NNPC and Dangote.

On Monday, The PUNCH reported that the Technical Sub-Committee on Domestic Sales of Crude Oil in Local Currency had confirmed the preceding day that the supply of crude in naira by NNPC to the Dangote refinery would begin on Tuesday, October 1, 2024.

On September 13, 2024, the committee announced that the Federal Executive Council under the leadership of President Bola Tinubu approved the sale of crude to local refineries in naira and the corresponding purchase of petroleum products in naira.

“From October 1, NNPC will commence the supply of about 385kbpd (385,000 barrels per day) of crude oil to the Dangote refinery to be paid for in naira,” the committee had declared.

The Chairman of the Technical Sub-Committee is Zacch Adedeji, who doubles as Chairman of the Federal Inland Revenue Service.

The Special Adviser on Media to the FIRS Chairman, Mr Dare Adekanmbi, had responded in the affirmative when contacted on Sunday and asked if the plan for the crude oil supply to the $20bn Lekki-based plant was still intact.

“I can confirm that the Chairman of the Sub-Technical Committee, Zacch Adedeji, is working day and night to ensure that things go according to plans. He knows how important it is to have the agreement implemented as has been planned for the benefit of Nigerians,” Adekanmbi had stated.

But on Thursday, impeccable sources with three domestic refineries stated that they were not aware if the deal had commenced.

NNPC officials stayed mute when contacted for updates on the deal, directing our correspondent to the Ministry of Finance to get answers. The finance ministry did not provide answers when contacted.

However, a senior official with a domestic refinery said crude oil refiners including Dangote were still awaiting the Federal Government for the supply of crude in naira.

The official also noted that the government through its committee on crude-for-naira had assured operators that efforts were in top gear to deliver on the deal.

“You know that said it was to start on October 1, the technical committee is the one in charge now and they are working on it. They are supposed to arrive at a particular agreement and communicate it to us.

“But I can tell you that as of this moment, we haven’t received that communication yet. We are still waiting for them,” the operator who spoke in confidence due to lack of authorisation to speak on the matter, stated.

Another source with a major modular refinery, who is familiar with the deal, said, “The crude oil refiners’ body in Nigeria hasn’t been communicated yet on the deal. So we await the official communication because up till last week, we spoke with them (the government) and they assured us that the deal was still on course.

“However, I’d like to state that deals of this nature take a while before they are completed. There are a lot of things to be sorted before a final decision is reached. So we have to wait for them.”

The government explained in September that the naira-for-crude initiative would help reduce pressure on the naira, eliminate unnecessary transaction costs, and improve the availability of petroleum products across the country.

“Since then, the implementation committee chaired by the Minister of Finance and we, the technical committee, have worked intensely with NNPC and Dangote refinery to fashion out the details of the modalities for the implementation of the FEC approval,” Adedeji had stated.

While stating that crude would be sold to Dangote in naira from October 1, the committee chairman and FIRS boss said, “In return, the Dangote refinery will supply PMS (petrol) and diesel of equivalent value to the domestic market to be paid 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 a smooth implementation of this initiative.”

Adedeji explained that the technical committee that worked to flesh out the initiative would transition to an implementation execution and monitoring committee that would be working out of Lagos for the next three to six months.