By Aaior K. Comfort

The supply of crude oil in exchange for naira from the Nigerian National Petroleum Company Limited (NNPC) to the Dangote Petroleum Refinery has not commenced as scheduled, despite the initial deadline of October 1, 2024. As of Thursday, October 3, there are indications that the deal has yet to take off.

Officials from the Dangote refinery, the Nigerian Upstream Petroleum Regulatory Commission, the Federal Ministry of Finance, and the NNPC have remained silent when contacted for updates on the naira-for-crude arrangement between NNPC and Dangote.

Earlier reports indicated that the Technical Sub-Committee on Domestic Sales of Crude Oil in Local Currency had confirmed the supply would begin on October 1. On September 13, the committee announced that the Federal Executive Council, led by President Bola Tinubu, approved the sale of crude oil to local refineries in naira, with corresponding purchases of petroleum products also in naira.

“From October 1, NNPC will commence the supply of about 385,000 barrels per day of crude oil to the Dangote refinery to be paid for in naira,” the committee had declared.

However, as of Thursday, sources within domestic refineries indicated they are unaware if the deal has commenced. NNPC officials declined to provide updates, directing inquiries to the Ministry of Finance, which did not offer any information.

A senior official at a domestic refinery stated that refiners, including Dangote, are still awaiting communication from the Federal Government regarding the supply of crude in naira. “They are supposed to arrive at a particular agreement and communicate it to us. But as of now, we haven’t received that communication yet,” the official said on condition of anonymity.

Another source familiar with the deal noted that the Crude Oil Refiners’ Association of Nigeria has not been formally informed about the commencement of the agreement. “We await the official communication because up till last week, we spoke with them (the government) and they assured us that the deal was still on course,” the source added.

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.

Zacch Adedeji, Chairman of the Technical Sub-Committee and Federal Inland Revenue Service (FIRS), had stated that the committee worked intensively with NNPC and Dangote Refinery to finalize the modalities for implementing the Federal Executive Council’s approval.

“In return, the Dangote refinery will supply PMS (petrol) and diesel of equivalent value to the domestic market to be paid in naira,” Adedeji explained. “Diesel will be sold in naira by the Dangote refinery to any interested off-taker. PMS will only be sold to NNPC, which will then sell to various marketers.”

Adedeji also mentioned that the technical committee would transition to an implementation, execution, and monitoring committee operating out of Lagos for the next three to six months.

As the initial deadline passes without commencement, industry stakeholders are awaiting official communication to clarify the status of the naira-for-crude deal.