Oil and gas experts have said that President Bola Ahmed Tinubu’s recent order to the Nigerian National Petroleum Company Limited on sale of crude oil in Naira to Dangote Refinery and other local refineries will not end the 650,000 barrel per day refinery’s challenges in the sector.
There was a major decision on Monday at the Federal Executive Council, Tinubu approved NNPCL to sell crude oil to Dangote Refinery and other local refineries in Naira.
The move was aimed at ending the crude crisis being experienced by local refineries.
Recall in the last months, Dangote Refinery has continued to lament the crude oil supply crisis and other challenges experienced in Nigeria’s oil sector.
This is as it approached the US and Brazil for crude import despite Nigeria being Africa’s largest crude producer.
Dangote Refinery had accused International Oil Companies in Nigeria of sabotage over the supply crisis. The company later had a dispute with the Nigerian Midstream and Downstream Petroleum Regulatory Authority over regulatory compliance.
As the crisis raged, the Chairman of Dangote Group, Aliko Dangote, alleged that NNPCL officials own a blending plant in Malta, a southern European island.
However, on Monday, Tinubu ordered NNPCL to sell crude in Naira to Dangote Refinery and other local refineries.
The Special Adviser to the President on Information and Publicity, Bayo Onanuga disclosed this in a statement on his X account.
Onanuga said the move was to ensure the stability of the pump price of refined fuel and the dollar-naira exchange rate.
Accordingly, he said the country’s 450,000 barrels of crude meant for domestic consumption should be sold in Naira to Nigerian refineries with Dangote Refinery as a pilot.
This becomes expedited as “Dangote refinery currently requires about 15 cargoes of crude oil at about $13.5bn yearly. NNPC has committed to supply four”, he said.
In a further analysis of the development, the President’s Special Adviser on Revenue, Mr. Zacch Adedeji, who also serves as Chairman of the Federal Inland Revenue Service, said Monday’s move mitigates Nigeria’s heavy reliance on foreign exchange for crude oil imports, accounting for roughly 30 to 40 percent of its forex expenditure.
According to him, the decision will save the country an estimated annual savings of $7.3 billion and will reduce monthly forex expenditure on petroleum products by an estimated $660 million.
“Monthly, we spend roughly $660m in these exercises, and if you analyze that, that will give us $7.92bn savings annually,” he stated
Meanwhile, experts within the oil sector have expressed divergent views on the implications of Tinubu’s order and its impact on the Nigerian economy.
Leave a Reply