Dangote Refinery, NNPC progress in negotiations on in-country fuel supply as Dangote agrees to sell pms in Naira
The Nigerian National Petroleum Company Limited (NNPC) and the leadership of the Dangote Refinery is seemingly making progress in their three-week negotiations on in-country fuel supply.
Aliko Dangote, President of Dangote Group was reported to to have now accepted to sell the refined petrol in Nigeria’s local currency, the Naira, as part of the agreements reached with the NNPC.
Dangote said: ‘’We are going to accept this because the country desperately needs foreign exchange, and the value of the Naira is deteriorating every day. I understand that I am going to take a loss – because, by the time we sell the product and convert it to dollars, the exchange rate may have worsened.”
This indication emerged Thursday with the national oil company requesting to deploy its permanent monitoring team at the facility as part of the deal between the duo.
Vice President, Oil and Gas, Dangote Industries Limited, Devakumar Edwin, disclosed this during an X Space event hosted by ‘Nairametrics’.
Edwin, at the session, discussed the progress made by the refinery in the production of Premium Motor Spirit (PMS) commonly known as petrol, stressing that the NNPC had informed the management of Dangote Group of its intention to station a team of six to 10 people permanently at the refinery.
Edwin said NNPC told the management of the refinery that the team would be overseeing the production and buying back the products in Naira since the national oil company would be supplying the crude.
He added that the request aligns with the NNPC’s aim to closely monitor the entire process, ensuring consistent crude supply and efficient processing while securing a steady flow of PMS for the country.
“NNPC has informed us that they intend to station a team of six to 10 people permanently at our refinery. They’ve asked us to provide office space for them since they will be supplying the crude, overseeing the production, and buying back the products in Naira.
“This request aligns with the NNPC’s aim to closely monitor the entire process, ensuring that crude is supplied and processed efficiently while securing a steady flow of PMS for the country,” Edwin stated.
Providing further information on the production and commercial arrangements at the refinery, Edwin noted that the discussions with the NNPC revolved around a new model for crude supply where the refinery will buy crude from the government in Naira and sell PMS in the same currency, rather than in dollars.
He noted that the negotiations were ongoing, with critical aspects like crude pricing and the Naira exchange rate yet to be finalised.
“We are still in talks with the government about receiving crude in Naira. The discussions are ongoing, and nothing has been finalised yet. Some unresolved issues include the pricing of crude, the pricing mechanism, and determining the appropriate exchange rate for the Naira,” he said.
But Edwin explained that Aliko Dangote had agreed to the federal government’s proposal to sell products from the NNPC to the government in Naira, despite the likelihood of financial losses.
According to Edwin, Dangote highlighted the critical need for foreign exchange and the deteriorating value of the Naira as key factors in his decision to proceed with the deal.
