Following President Bola Tinubu’s directive, the Nigerian National Petroleum Company Limited (NNPC) is mandated to sell crude oil to the Dangote Petroleum Refinery and other domestic refineries in naira. This directive aims to ensure the stability of both the pump price of refined fuel and the dollar-naira exchange rate.
Bayo Onanuga, the Special Adviser to the President on Information and Publicity, announced this decision via his official X handle. The Federal Executive Council adopted this measure to mitigate fluctuations in fuel prices and stabilize the naira against the dollar.
The $20 billion Dangote Refinery, located in Lekki, Lagos, will require approximately N1.7 trillion worth of crude oil monthly to meet this mandate. Analysis of industry data indicates that the average cost of crude oil in 2024 is projected to be around $83 per barrel, based on statistics from Statista, a global statistical firm.
Alhaji Aliko Dangote, President of Dangote Industries, recently stated that the refinery aims to reach a refining capacity of 500,000 barrels per day (bpd) by August 2024, with a target to increase this capacity to 550,000 bpd by December 2024.
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During the initial phase, from August to November 2024, the refinery is expected to refine 500,000 bpd. Using the $83 per barrel average price of Brent crude oil, the global benchmark, this equates to a daily crude oil requirement worth approximately $41.5 million.
Given the average exchange rate of N1,362.6/$ in 2024, this translates to a daily expenditure of about N56.55 billion.
Consequently, the Dangote Refinery will need about N1.7 trillion worth of crude oil each month to comply with President Tinubu’s directive.
This substantial requirement underscores the significant impact of the directive on both the refinery’s operations and the broader Nigerian economy, highlighting the critical role of the NNPC in supporting domestic refining capacities.
Chief Ukadike Chinedu, the National Public Relations Officer of the Independent Petroleum Marketers Association of Nigeria, emphasized that despite Nigeria’s efforts to boost crude oil production, the NNPC should comply with President Tinubu’s directive.
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Eche Idoko, the Publicity Secretary of the Crude Oil Refiners Association of Nigeria, noted that selling crude to local refineries in naira would reduce petrol costs and strengthen the naira.
During a recent refinery tour, Aliko Dangote revealed that the facility, fully operational, is expected to generate over $26 billion annually, with a storage capacity of 4.5 billion liters. The refinery is set to produce 53 million liters of petrol per day.
The NNPC aims to increase crude oil production to two million barrels per day by year-end, up from 1.6 million barrels in July. NNPC Group Managing Director Mele Kyari reaffirmed their commitment to this goal.