The Federal Government has reaffirmed that the arrangement allowing the sale of crude oil in naira to Dangote Refinery remains in place, clarifying that it was never canceled.
Minister of State for Petroleum Resources (Oil), Senator Heineken Lokpobiri, emphasized on Tuesday that the initiative was a pilot scheme, approved by the Federal Executive Council (FEC), directing the Nigerian National Petroleum Company Limited (NNPCL) to supply crude oil to Dangote Refinery in the local currency.
“The government is not canceling it. The scheme presented to the FEC was a pilot arrangement, specifically for Dangote Refinery, with plans to extend it to others over time,” Lokpobiri stated.
Clarification on the Pilot Scheme
The minister highlighted that this particular initiative was exclusive to the NNPCL and Dangote Refinery, which is why International Oil Companies (IOCs) and other industry operators were not initially included.
“This arrangement was limited to NNPCL. However, Dangote Refinery also purchases crude oil from other operators in different currencies. The government has always encouraged refineries to buy crude in any currency, whether in naira or foreign exchange, based on prevailing market rates,” he noted.
Lokpobiri explained that the ongoing debate surrounding crude sales in naira often stems from concerns over exchange rate fluctuations, which, he clarified, are determined by market forces and not by the government. He reiterated that crude oil transactions should be based on negotiations between producers and refineries, giving them the flexibility to decide on payment terms.
“If a refinery wishes to buy crude from an upstream producer, the mode of payment whether in naira or dollars is entirely their decision. The government does not dictate this,” he added.
NNPCL’s Operational Independence
Further addressing concerns about NNPCL’s role, Lokpobiri stressed that the Petroleum Industry Act (PIA) had transformed the NNPCL into a fully commercialized entity, similar to global oil giants such as Petrobras and Aramco. He emphasized that while the government maintains oversight, NNPCL now has the autonomy to make strategic business decisions.
“NNPCL operates with a measure of independence, allowing it to make commercially viable decisions while serving national interests. However, if concerns arise, we remain open to engagement and dialogue to address industry-related issues,” Lokpobiri assured.
PETROAN’s Requests and Industry Development
During a meeting with the Petroleum Products and Retail Outlet Owners Association of Nigeria (PETROAN), Lokpobiri addressed key concerns raised by the association’s President, Dr. Billy Harry. PETROAN requested representation on the board of the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) to enhance industry contributions.
However, Lokpobiri clarified that the composition of the NMDPRA board is dictated by the PIA, and any inclusion of PETROAN would require an amendment to the law.
Additionally, the minister urged PETROAN to integrate Compressed Natural Gas (CNG) infrastructure into their filling stations to support the government’s energy diversification drive. The association also advocated for guaranteed petroleum product allocations and instant loading from depots upon payment, aiming to improve distribution efficiency.
Encouraging Local Refining and Competition
Harry reaffirmed PETROAN’s support for local refining initiatives and called for policies that ensure sustained production in domestic refineries. He also stressed the need to maintain petroleum product importation as a strategic option to foster market competition and price stability.
“We support local refining, but we also advocate for continued importation to ensure a balanced supply and competitive pricing. A fully liberalized petroleum market will drive efficiency and affordability for consumers,” Harry stated.
As Nigeria navigates its energy transition, industry stakeholders continue to emphasize the importance of policies that promote investment, competition, and sustainable fuel pricing.
