There seems to be progress in the continuing talks between the Nigerian National Petroleum Company Limited (NNPC) and the Dangote Refinery regarding the in-country fuel supply. Sources said on Thursday that both sides had made great strides in their three-week talks, as reported by ARISE NEWS. In accordance with the agreement, NNPC has asked to have a permanent monitoring team sent to the Dangote Refinery to supervise daily operations. In addition, as part of the agreements made with NNPC, Aliko Dangote, President of Dangote Group, has consented to sell refined petroleum at the 650,000 barrels per day facility in Nigerian Naira.CONTINUE FULL READING>>>>>
This development was shared by Devakumar Edwin, Vice President of Oil and Gas at Dangote Industries Limited, during an X Space event hosted by ‘Nairametrics’ and monitored by THISDAY. Edwin explained that NNPC intends to assign a team of six to 10 members at the $20 billion refinery to monitor production and manage the purchase of refined products in Naira, since NNPC will be supplying the crude oil.
He explained that the NNPC’s request aligns with their goal of closely monitoring the entire process, ensuring a steady supply of crude oil, efficient refining, and a reliable flow of Premium Motor Spirit (PMS) for the country.
“NNPC has informed us that they plan to station a permanent team of six to 10 people at our refinery. They’ve asked us to provide office space for them, as they will be supplying the crude, overseeing the production, and purchasing the refined products in Naira,” Edwin said.
He further explained that this arrangement fits with NNPC’s objective of ensuring the smooth operation of the refinery while maintaining a stable fuel supply for Nigeria.
Edwin also highlighted that discussions with NNPC have focused on a new model for crude supply. Under this model, the refinery will buy crude oil from the government in Naira and sell PMS in the same currency, rather than in U.S. dollars, marking a shift in the typical commercial arrangements for fuel production and sales.
He noted that the negotiations were still ongoing, with key issues such as crude pricing and the Naira exchange rate yet to be finalized.
“We are still in discussions with the government about receiving crude in Naira. Nothing has been settled yet. Some of the unresolved matters include the pricing of crude, the pricing mechanism, and deciding the appropriate exchange rate for the Naira,” Edwin explained.
Despite these challenges, Edwin said that Aliko Dangote had agreed to the government’s proposal to sell refined products to the NNPC in Naira, even though this could lead to financial losses.
According to Edwin, Dangote emphasized the need to address Nigeria’s foreign exchange crisis and the weakening value of the Naira as crucial reasons for moving forward with the deal.
“Dangote stepped in and said, ‘We are going to accept this because the country desperately needs foreign exchange, and the Naira is losing value daily. I understand I might incur losses, as by the time we sell the products and convert them to dollars, the exchange rate could worsen.’”
Edwin also voiced his frustration over the reluctance of local marketers to purchase from the Dangote Refinery. Despite the refinery’s efforts to supply affordable petroleum products, many Nigerian traders continue to import refined products from abroad, ignoring the local facility.
“The whole point of building this refinery in Nigeria was to use our local crude instead of exporting raw materials and importing finished products. We should be refining and using these products domestically while exporting any surplus,” he said.
However, Edwin revealed that local marketers were only buying about 3 percent of the refinery’s production. The remaining 97 percent, including diesel and jet fuel, is being exported due to the boycott by local traders who refuse to purchase the refinery’s lower-priced products.
“I’m selling 2 to 3 per cent to small traders who are willing to buy, while the rest 95 to 97 per cent I’m forced to export,” suggesting that some marketers prefer to import for some reasons he did not state.CONTINUE FULL READING>>>>>
