Dangote Refinery to Sell Petrol in Naira 

Dangote Refinery and NNPC’s Groundbreaking Agreement

iexclusivenews – In a significant development for Nigeria’s oil sector, the Dangote Refinery and the Nigerian National Petroleum Company Limited (NNPC) have made substantial progress in their ongoing negotiations regarding domestic fuel supply.

The talks, which have lasted for three weeks, have resulted in two major breakthroughs:

Dangote’s agreement to sell petrol in Naira and NNPC’s request to deploy a permanent monitoring team at the refinery.

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Dangote Refinery Concedes to Naira Sales

Aliko Dangote, the President of Dangote Group, has accepted the federal government’s proposal to sell refined petroleum products to the government in Naira.

This decision comes despite the potential for financial losses due to the volatile exchange rate. Devakumar Edwin, Vice President of Oil and Gas at Dangote Industries Limited, revealed this information during an X Space event hosted by ‘Nairametrics‘.

NNPC Monitoring Team Request

As part of the emerging deal, the NNPC has requested to station a permanent team of six to ten people at the $20 billion Dangote Refinery.

This team will oversee production processes and ensure efficient crude supply and processing.

The move aligns with NNPC’s goal of securing a steady flow of Premium Motor Spirit (PMS) for the country.

While significant progress has been made, several critical aspects of the deal remain unresolved:

1. Crude pricing mechanisms

2. Appropriate Naira exchange rate

3. Final terms of the crude supply model

Edwin emphasized that discussions are ongoing to finalize these crucial details.

Local Market Resistance

Despite the Dangote Refinery’s efforts to supply affordable petroleum products, local marketers have shown resistance.

Edwin expressed frustration over the apparent boycott, revealing that only about 3% of the refinery’s output is being purchased by local traders.

The remaining 97% of production, including diesel and jet fuel, is being exported.

Dangote Refinery Production Capacity and Export Potential

The Dangote Refinery boasts an impressive production capacity:

– Up to 54 million liters of refined petroleum products per day

– 44% of production can meet Nigeria’s entire petroleum needs

– 56% of production available for export

However, inconsistent local crude supplies have forced the refinery to rely on imported crude from countries like the US and Brazil.

NNPC Role in the New Arrangement

Under the proposed deal, NNPC will:

1. Supply crude oil to the refinery

2. Monitor production processes

3. Buy back products in Naira

This arrangement aims to ensure transparency and efficiency in the entire production and distribution chain.

Impact on Foreign Exchange and Economy

The new deal is expected to have significant implications for Nigeria’s economy:

– Potential savings in foreign exchange through import substitution

– Generation of foreign exchange through exports

– Stabilization of the domestic fuel market

However, challenges remain, including resistance from some market players and the need to finalize critical aspects of the agreement.

As negotiations continue, stakeholders in Nigeria’s oil sector are watching closely to see how this landmark deal between Dangote Refinery and NNPC will reshape the country’s petroleum landscape.