Minister of State for Petroleum Resources (Oil), Senator Heineken Lokpobiri speaks during a media briefing to announce the 1.8mbopd crude oil production milestone at the NNPC Towers in Abuja, recently. The Minister is flanked to his right by the Chairman, NNPC Board, Chief Pius Akinyelure and to his left, by the GCEO NNPC Ltd, Mr. Mele Kyari.
Strong indications have emerged suggesting that the key reason why the Nigerian National Petroleum Company Limited (NNPCL) suspended the naira-for-crude oil swap deal with domestic refiners, including Dangote Refinery and other private operators was to suppress the refineries who are said to be beating NNPCL in the game of PMS price war.
Business Hilights recalls that the naira-for-crude arrangement, which was introduced on October 1 2024, allowed local refiners to purchase crude oil in naira instead of dollars, thus freeing the naira to rise in market value.
The initiative was designed to support domestic refining capacity, reduce reliance on imported petroleum products, and stabilize the local currency by easing pressure on foreign exchange reserves.
The termination of the agreement means that Nigerian refineries, including the much-anticipated Dangote facility, will now have to source crude oil from international suppliers, paying in dollars instead of naira.
However, there seems to be a fresh twist to the naira-for-crude controversy as the Chairman, Technical Sub-Committee, Zacch Adedeji has voided the report saying the policy is still in force.
In a statement he signed on Monday and made available to Business Hilights, Adedeji averred that “These reports do not reflect the realities of the ongoing work under the Federal Executive Council Initiative on Domestic Sales of Crude Oil and Refined Products in Naira”.
Even as the government has denied the development, private refineries has remained mute an indication that this unfavourable policy shift is expected to escalate operational costs, potentially leading to higher fuel prices at the pump.
Besides, there is another dangerous angle to the issue capable of pushing the economy into big economic crisis and another cycle of endless hardship as a reliable source familiar with the development allege that the NNPCL had informed local refiners that it has already committed its crude oil production to forward contracts, leaving no supply available for domestic refineries. The sad implication of this is that local refiners will have to import crude oil to run their refineries in a country that is the sixth largest oil producer in the world.
Meanwhile, in an update provided by the Adedeji statement, the Technical Sub-Committee averred as follows; “As the committee driving the implementation of this initiative, we wish to provide an update on the Federal Executive Council initiative and confirm as follows:
“The Naira-Based Domestic Sales Framework Remains in Place.
The policy framework enabling the sale of crude oil in naira for domestic refining remains in force. The initiative was designed to ensure supply stability and optimize the utilisation of local refining capacity. There has been no decision at the policy level to discontinue this approach nor is it being considered. After implementing the policy for some months, evidence abounds that it is the right way to go and it will continue to help the economy.
Local Refineries Have Not Been Excluded from Domestic Crude Supply.
“The engagement process for crude oil supply to domestic refineries therefore remains in place by structured agreements, balancing factors such as availability, demand, and market conditions. There is no exclusion of local refineries from access to domestic crude. The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) is actively ensuring compliance with the Domestic Crude Oil Obligations provisions of the Petroleum Industry Act.
The Initiative Supports Competitive Pricing and Market Efficiency.
“The framework for domestic crude transactions is designed to promote a competitive and efficient pricing environment.
The Committee Continues Its Work on Strengthening Implementation.
“We remain committed to ensuring the efficient execution of this initiative in line with its core objectives – enhancing local refining, reducing foreign exchange exposure, and stabilising the domestic fuel supply.
e-signed
Chairman, Technical Sub-Committee, Zacch Adedeji
