Discussions over the selling of crude oil by the Nigerian National Petroleum Company Limited to the Dangote Petroleum Refinery in naira and the purchase of refined petroleum products from the $20 billion plant in naira are coming to an end between the two parties.
During a space session hosted by Nairametrics on X on Thursday, Vice President of Oil and Gas at Dangote Industries Limited, Devakumar Edwin, announced that talks between the parties to the agreement could come to an end next week.
The Dangote representative added that oil marketers had informed President Bola Tinubu that the refinery’s cheap diesel was hurting their companies and that they had continued to boycott the diesel and aviation fuel produced by the Lekki facility.
Furthermore, Edwin disclosed that because the national oil corporation would be supplying the facility with crude oil, NNPC had insisted on being in charge of managing the production of refined goods at the Dangote refinery.
The PUNCH published a story in August 2024 stating that the Federal Government had revealed that starting on October 1, 2024, crude oil would be sold to the Dangote refinery and other nearby refineries.
This was disclosed in a meeting with the Implementation Committee, which was tasked with carrying out the decision, by Wale Edun, the Minister of Finance and Coordinating Minister of the Economy.
“The Minister of Finance and Coordinating Minister of the Economy, Mr Wale Edun, today led the Implementation Committee meeting on the transition to crude oil sales in naira.
“The meeting reviewed progress on key initiatives, including the upcoming commencement of naira payments for crude oil sales to the Dangote Refinery starting October 1, 2024,” the finance ministry had stated in a post on its official X handle in August.
“It also stated that the Executive Chairman of the Federal Inland Revenue Service, Dr Zacch Adedeji, and the Chairman of the Technical Sub-Committee reported that “The first PMS delivery from Dangote is expected next month (September) under existing agreements.”
The vice president of Dangote Industries, Edwin, gave updates on this at the space session on Thursday. He said that talks were progressing on naira transactions for the purchase of crude and the buyback of products.
Edwin said, “Now we are still discussing with the government to give us the crude in naira. The discussions have been going on. It has not yet been concluded. When we buy the crude from them in naira, they will take the products back from us in naira, that’s where we are. We are still in discussions.
“So now whatever we are producing, they will buy back from us. In fact, NNPC has told us they will have a team of six to 10 people permanently stationed inside our refinery. They even told us we should give them office space because they are going to give the crude.
“They are going to monitor the production and then they will buy it back in naira. So, this is where we are and we are waiting for the conclusion of the discussions. Hopefully, by next week, if it gets concluded, we can kick off.”
Edwin claimed that due to the nation’s difficulties with foreign money, Alhaji Aliko Dangote, the president of the Dangote Group, was the one who insisted on paying the Nigerian government in naira.
“When it came to petrol, we told the Presidency that if we were going to continue to import crude, our cost of production would be high and of course, our quality is very high. So, we will continue to export and manage the business. Then they sat with us and said, ‘Okay, we will try and give you crude allocation and you please produce and sell to us the products which you are producing out of the crude’. We said, yes.
“Then they said, can you sell it in naira? We said, no, we are a free zone company. We will be normally selling in dollars. They said, no, the country is in acute scarcity of dollars. So, please, we will supply the crude to you in naira. Sell the product to us in naira. Though internally, including me, some of us objected to the idea. My president clearly said we are going to accept this because the country is badly in need of foreign exchange.
“The currency value is dropping every day. Yes, I know I am going to take a loss because by the time we sell it in naira and convert it to dollars, (we are not even getting the dollars). By the time we convert, the currency may become weaker. So, we know he (Dangote) is going to lose. He said, I’m willing to take the loss in the interest of the country. I don’t mind, but the country is in bad shape. Somebody has to take certain risks. I’m willing to face the loss to whatever extent it is. So, that is how we agreed,” Edun stated.
Additionally, he disclosed that marketers and importers of petroleum goods alerted President Tinubu about the Dangote refinery following its dramatic drop in diesel prices.
He claims that more than 95% of Nigerian importers of petroleum products do not purchase goods from the Dangote refinery.
He claimed that because local petroleum product importers are not very popular, the refinery struggles to sell roughly 29 tankers of diesel every day.
He said that the refinery exports the majority of its diesel and aviation fuel due to low local demand.
He stated that because the local supply from the NNPC is still scarce, the Dangote refinery has imported about 57 shiploads of petroleum.
“Petroleum product marketers in Nigeria have written to President Bola Tinubu, complaining that the refinery’s local diesel prices, which have dropped from N1,200 to N1,000 and now to N900 per litre, are negatively impacting their businesses,” Edwin stated.
Regardless, he insisted that 44% of the refinery’s petrol production capacity is adequate to supply local demand in Nigeria despite the difficulties.
He said, “You can come to the refinery and see, I can load 2,900 tankers daily. The whole country is empty, not one tanker. Whereas, where I can load 2,900 a day, not one tanker is being loaded. So they want to continue to import. So they are just blockading us.
“Number two, they (marketers) even wrote to His Excellency, the President. I have a copy I can share with all of you, where they wrote to the President, ‘Oh, Dangote Group came in and started producing diesel. They dropped the price the first time, they dropped the price the second time, and it is disturbing us.’
“So the interest of the refinery was to produce locally and try to supply at a reasonable price. So, we gave a reasonable price, we dropped and then we dropped the second time and they wrote to His Excellency, the President saying we are dropping the price and disturbing the market. So, they refused to buy from us.”
According to the official, around 29 tankers are currently removing fuel from other importers’ depots every day while ignoring domestic output.
Earlier on Monday, Edwin stated on the Brekete Family live show that if the NNPC and other petroleum dealers in the nation refuse to buy Dangote petrol, it will be exported.
Edwin said, “There has been a kind of a blockade from lifting our products within the country,” in response to the question of whether the petrol would be marketed locally. As a result of the traders’ attempts to blockade, we are currently exporting our petroleum products. We are prepared to provide the nation with as much PMS as we can.
“But if the traders or NNPC are not buying the product we will end up exporting the PMS as we are doing with the aviation jet and diesel,” he declared.
Edwin expressed amazement that, when the refinery was about to start up, the company began to encounter new difficulties that it had not anticipated.
He regretted that Nigeria is still importing refined petroleum products and exporting crude after more than thirty years, recalling that the original idea was to add value to the country’s raw materials.
Edwin said that the refinery has not loaded up to 5% of the gantry’s capacity due to limited local usage, even though the gantry has the potential to load 2,900 tankers each day.
“Go and see our product gantry, we can load 86 tankers at any given time. We can load 2,900 tankers of petroleum products every day, but we are not even loading five per cent, because those who are interested in the trading business, feel that probably this local production is going to affect their established interest, so they are not allowing our products to be sold locally. They are not coming to lift our products. So, what are we doing? We are exporting the products.
“Yes, the refinery can survive, we can import the crude, we can export petroleum products, and we can survive. But is that why he invested in the refinery?” he lamented.
In a related event, Dr. Muiz Banire, SAN, a former commissioner of transport and environment for Lagos State, was taken to task by NNPC spokesperson Olufemi Soneye for claiming in his column in a newspaper publication that NNPC is Nigeria’s biggest black hole.
“At this critical intersection, the task for all well-meaning Nigerians should be how to find lasting solutions to the mischiefs in the oil sector and not to look for scapegoats, as Dr Banire has done.
“According to Banire, Nigeria has been experiencing fuel scarcity since 1973 on the back of fuel subsidy and the NNPC Ltd is responsible for it. The assertion that the NNPC is responsible for this state of affairs is moot. The policy of fuel subsidy is not the preserve of the NNPC.
“Various administrations over the years have thought it wise to subsidize the cost of petroleum products for citizens. They came up with different methods of doing that. The role of NNPC Ltd has been to implement the policy as decided by the government. At a point when the various administrations felt that the fuel subsidy policy had become a burden that should be done away with, they made it known. NNPC Ltd, as the national oil company, implemented it.
“This was the case in 2012 when the nation went up in protest against the government’s decision to remove fuel subsidies. The same scenario repeated itself in 2019 when the then-administration came up with the policy to remove fuel subsidies. NNPC Ltd is neither responsible for the policy of fuel subsidy nor its removal,” Soneye stated.
