FG Confirms Status of Naira for Crude Oil Agreement Between NNPC and Dangote

• The federal government has stated that the naira for crude deal has not been cancelled with local refineries
• The minister of petroleum resources said the initiative remains in place as a pilot scheme between NNPC and Dangote Refinery
• NNPC Limited said it has made over 84 million barrels of crude oil available to the Dangote Refinery

Legit.ng journalist that Ibemere has over a decade of business journalism experience with in-depth knowledge of the Nigerian economy, stocks, and general market trends.

Heineken Lokpobiri, the minister of petroleum resources (oil), has clarified that the government has not terminated the naira for crude oil arrangement.

The deal involves the Nigerian National Petroleum Company Limited (NNPCL) supplying crude oil to domestic refineries, including the Dangote Refinery, with payments made in naira.

Speaking to journalists on Tuesday, March 11, Lokpobiri noted that the deal has not been called off by the government.

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Lokpobiri explained that the deal between NNPC and Dangote Refinery was the pilot scheme.

According to him, the dispute has always been about the exchange rate, which is not determined by the government.

He said:

“It is purely private sector issue. If you are in the upstream and you have a modular refinery next to you and the man wants to buy crude, it’s between two of you that would negotiate and agree on what price. And the person may decide to pay you either in dollars or in Naira.

“Government is not canceling it. What was taken to council was a pilot scheme where they said NNPC should be selling crude in naira to Dangote Refinery. We’ve always encouraged people to buy crude in whatever currency. Even if you buy in Naira, it’s going to be at a prevailing exchange rate. And I do know that people have been buying crude to refine in their respective local refineries in naira.

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“We’ve always done that. So it is not true that the scheme is canceled. Not at all. That one that was taken to FEC was a scheme specifically for Dangote Refinery and they said orders will also follow. And that was why that one didn’t include the crude for Naira from IOCs and other operators. It was basically only NNPC.

“But that doesn’t mean that Dangote doesn’t buy crude from other operators. They buy. But that Naira for crude scheme was basically between NNPC and Dangote Refinery.

BusinessDay reports that Lokpobiri explained that NNPC, as a national oil company, makes decisions that they feel are best for Nigeria in the industry with limited government interference.

He added:

“That doesn’t mean that we can’t call them to order from time to time because they are a national oil company. But the point I’m making here is NNPC has a measure of independence now so that they can make proper business decisions that will be best for Nigerians.”

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NNPC, Dangote plan new crude oil deal

Earlier, Legit.ng reported that NNPC Limited has clarified the end of the naira for crude agreements with local refineries, including the Dangote refinery.

The oil company explained that the agreement was only for six months and that it had begun negotiations for a new one.

The naira-for-crude agreement was introduced to boost domestic refining and reduce dependence on foreign exchange, easing pressure on the naira.

Proofreading by Nkem Ikeke, copy editor at Legit.ng.

Source: Legit.ng