In a strategic move set to reshape Nigeria’s petroleum landscape, the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) and the Nigerian National Petroleum Company Limited (NNPCL) have reached a groundbreaking agreement to supply crude oil to the Dangote Refinery in local currency. This deal marks a significant shift in the nation’s oil industry, aligning with broader efforts to enhance the domestic economy and stabilize fuel supply across the country.
Under the terms of the agreement, the Dangote Refinery, Africa’s largest oil refining facility, will receive crude oil from NNPC, with payments to be made in Naira. This arrangement is expected to reduce pressure on Nigeria’s foreign exchange reserves and bolster the local currency, as the country traditionally conducts crude oil transactions in U.S. dollars.
The NMDPRA revealed that the refinery is now prepared to commence the supply of 25 million liters of Premium Motor Spirit (PMS), commonly known as petrol, to the domestic market starting today, September 3rd, 2024. This initial supply will address the ongoing fuel shortages that have plagued various parts of Nigeria, offering much-needed relief to businesses and households alike.
According to NMDPRA, the refinery’s output is set to increase significantly by October 2024, with daily production expected to reach 30 million liters. This ramp-up in supply will further stabilize the fuel market and reduce the nation’s dependence on imported petrol, a reliance that has long strained the national budget and exposed the economy to volatile international market dynamics.
“This agreement is a major milestone in Nigeria’s quest for energy security and economic stability,” stated an NMDPRA spokesperson. “By sourcing and supplying crude oil locally, we are not only ensuring a steady supply of petrol to meet domestic demand but also reinforcing the strength of our local currency in the global market.”
The decision to conduct crude oil transactions in Naira is also seen as a strategic response to Nigeria’s ongoing foreign exchange challenges. The move is expected to provide a more predictable and stable pricing structure for the refinery’s operations, shielding it from the fluctuations of the international currency markets.
The Dangote Refinery, with a processing capacity of 650,000 barrels per day, has been hailed as a game-changer for Nigeria’s oil sector. After years of reliance on imported fuel, the country is on the brink of becoming self-sufficient in petrol production, a development that could save billions of dollars annually in foreign exchange and reduce the cost of fuel for consumers.
The collaboration between NMDPRA, NNPCL, and the Dangote Refinery underscores the government’s commitment to revitalizing the oil sector and ensuring that the benefits of local production are felt throughout the economy. With the refinery’s output set to expand in the coming months, Nigerians can anticipate more stable fuel prices and a reduction in the long-standing issues of scarcity and supply disruption.
As the Dangote Refinery prepares to deliver its first batch of petrol to the domestic market today, industry stakeholders are optimistic that this partnership will mark the beginning of a new era in Nigeria’s oil industry—one that prioritizes local production, strengthens the national economy, and enhances the overall well-being of the population.
