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Oil marketers and domestic refiners have urged the Federal Government to provide details about the naira-for-crude deal following the announcement by the Federal Ministry of Finance that the deal started on October 1, 2024.
On Saturday the Federal Government said it had commenced the sales of crude oil and other refined products in naira.
The announcement was welcomed by the Crude Oil Refinery Owners Association of Nigeria and the Petroleum Retail Outlet Owners Association of Nigeria, but the operators asked the government to provide details about the deal.
The government stated on Saturday that the initiative commenced on October 1, 2024 without providing further details on the contractual agreement signed and pricing of the product.
The Ministry of Finance disclosed this in a post on its X handle.
The statement read, “The Minister of Finance and Coordinating Minister of the Economy announced that, in line with the Federal Executive Council directive, the sale of crude oil and refined petroleum products in naira has officially commenced as of October 1, 2024.
“Following a meeting of the Implementation Committee, chaired by the Minister of Finance on October 3, 2024, to conduct a post-commencement review of the Crude Oil and Refined Products Sales in Naira initiative, the commencement of this strategic initiative was affirmed by key stakeholders.”
Operators react
The Petroleum Retail Outlets Owners Association of Nigeria applauded the commencement of the initiative, stating that the growth of the naira is crucial for all stakeholders in the oil sector.
The PETROAN President, Billy Gillis-Harry, in an interview on Saturday, urged the NNPC and other parties involved to release the details of the agreement especially on pricing to calm the fears of Nigerians on a possible fuel price hike.
He said, “I am currently in my hometown because of the elections ongoing in Rivers State. It was free, fair and peaceful. So it’s only after the election, I will start paying attention to what is happening in the oil sector.
“PETROAN as an organisation introduced the argument that crude oil should be sold to Nigerian in-country refineries in naira.
“We said the government should come up with a policy that thinks out of the box to give value to this suggestion. We are happy and congratulate the current administration for crystalising that suggestion.”
He added, “The details of this agreement is not known yet but we hope that the intricacies will be revealed to the public because this business is the central value of everything that happen in our economy. PMS is key and the pricing of the crude is important as it determines the price of the commodity.
“It will be a great thing for us to know the details and it’s implementation. However, we are happy with the deal and congratulate every one involved.”
On his part, the Publicity Secretary of the Crude Oil Refinery Owners Association of Nigeria, Eche Idoko, commended the government for the initiative, but could not provide more details.
“It is a welcome development considering the impact which this move will have on domestic crude oil refining. So we commend the government for that and hope deal sails smoothly.
“However, I cannot give you further details now because I don’t have all the information as regards the deal yet. So we shall be getting more of the details and it shall be communicated when necessary. Overall, we laud the government for this.”
Last month, the Technical Sub-Committee on Domestic Sales of Crude Oil in Local Currency announced that the Federal Executive Council under the leadership of President Bola Tinubu had 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.
Similarly, the Special Adviser on Media to the Federal Inland Revenue Service Chairman, Mr Dare Adekanbi, responded in the affirmative when contacted last week if the plan for the crude oil supply to the $20bn Lekki-based plant was still intact.
But officials of Dangote and other refineries on Thursday stated that they were not aware if the deal had commenced.
Officials at the Dangote refinery and those at the Nigerian Upstream Petroleum Regulatory Commission, Federal Ministry of Finance, and NNPC, among others, also stayed mute when contacted for updates on the naira-for-crude deal between NNPC and Dangote on Thursday.
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.”
But on Saturday, the government announced that the deal had commenced in the statement from the finance ministry. It said this was after a meeting with critical stakeholders involved in the deal.
The statement added that officials at the meeting include the Minister of State, Petroleum (Oil), Heineken Lokpobiri, the Special Adviser to the President on Revenue, Zaccheus Adedeji, the Special Adviser to the President on Energy, Olu Verheijen, and the Chief Executive of the Nigerian Midstream and Downstream Petroleum Regulatory Authority, Farouk Ahmed.
Others include the representative of the Chairman of Dangote Group, the Vice President of Dangote Group, and the management of the Nigerian National Petroleum Company, led by the Group Chief Executive Officer, Mele Kyari, Chief Financial Officer, Umar Ajiya, and the NNPC Executive Vice President (Downstream), Adeyemi Adetunji.
