FG Gives New Instructions to Oil Companies on Crude Supply to Dangote Refinery, Others
- The federal government has mandated oil producers to prioritise selling their crude to domestic refineries
- The government, through its agency, stated that the new regulations will help to reduce dependency on imported refined goods
- Based on the new regulation, Dangote refinery and other local refineries can now purchase crude oil in dollars or naira
Legit.ng journalist Zainab Iwayemi has over three years of experience covering the Economy, Technology, and Capital Market.
The federal government has imposed new rules mandating that its oil producers sell their crude oil to local refineries.
Source: UGC
The federal government disclosed this through the Nigeria Upstream Petroleum Regulatory Commission (NUPRC).
According to the NUPRC in a Bloomberg report, the goal of the action is to lessen the nation's reliance on imported refined goods.
New regulations
According to the new regulation, all Nigerian oil companies are required to provide crude to domestic refineries that are unable to obtain it domestically.
Producers are only allowed to export crude after meeting their obligations for domestic supply.
When agreements about the supply of crude oil cannot be reached, the NUPRC is expected to act as a go-between, assisting in the setup of a sales purchase agreement based on the willing-buyer, willing-seller model.
Crude oil purchases now in naira and dollar
Furthermore, it said that Dangote Refinery and other local refineries could now purchase crude oil in dollars or naira.
According to NUPRC Chief Executive Gbenga Komolafe, the goal of this is to guarantee a steady supply of crude oil to domestic refineries and promote a smooth execution of the DCSO.
According to Komolafe, the currency of choice would be the naira or dollar, with the local currency alleviating pressure on the nation's foreign exchange rate.
He said:
“The PIA intends to make the implementation (of crude oil obligation) very easy for the parties, both for the producers and refineries. So the answer simply is that the currency for the transaction would either be in naira or dollar. That is the simple answer.
“But we all know that if the transaction is carried out in naira, that itself will free the pressure on the exchange rate. That will help the exchange rate. So that is the intent and besides, the overall intent of the Petroleum Industry Act is to develop our midstream, which is a very laudable provision of the PIA.”
The revised template's currency of payment section specified that payments could be made in US dollars, Nigerian Naira, or both.
He stated that in cases where payments are made in both currencies, the producer and refinery's agreed-upon payment split will apply.
This came as an earlier report stated that modular refineries in Nigeria were in danger of ceasing operations because they were unable to obtain foreign currency to pay for the US dollar-priced commodity known as crude oil.
Video shows Dangote Refinery rolling out diesel
The Dangote Refinery began rolling out diesel to marketers at its Lekki, Lagos facility on Monday, April 15, 2024, Legit.ng reported.
In a video posted on social media, the refinery said that it had commenced the distribution of diesel to registered marketers via land and sea, marking a significant development for Nigeria's fuel supply and the energy sector.
The Dangote Refinery began rolling out diesel to marketers at its Lekki, Lagos facility on Monday, April 15, 2024.
In a video posted on social media, the refinery said that it had commenced the distribution of diesel to registered marketers via land and sea, marking a significant development for Nigeria's fuel supply and the energy sector.
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Source: Legit.ng
