FG reassures local refineries on naira-for-crude deal

The federal government has reassured local refineries that they will benefit from the naira-for-crude oil swap deal aimed at boosting domestic refining capacity.

Earlier, TheCable reported that the Nigerian National Petroleum Company (NNPC) Limited had reportedly suspended the naira-for-crude deal until 2030, as the government-owned company has forward-sold all its crude oil.

However, following the report, NNPC said negotiations are ongoing for a new naira-for-crude deal with Dangote Petroleum Refinery, as the current agreement will expire at the end of March.

NNPC said the naira-for-crude deal, which commenced on October 1, 2024, was structured as a six-month agreement.

In a statement on Monday, Zacch Adedeji, chairman of the naira-for-crude policy technical sub-committee, said the naira-based crude oil supply arrangement with local refineries has not been discontinued.

Adedeji said the committee had provided an update on the federal executive council (FEC) initiative and confirmed that the naira-based domestic sales framework remains in place, adding that local refineries have not been excluded from domestic crude supply.

“The policy framework enabling the sale of crude oil in naira for domestic refining remains in force,” he said.

“The initiative was designed to ensure supply stability and optimise 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.

“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.”

Adedeji said the framework for domestic crude transactions is designed to promote a competitive and efficient pricing environment.

Also, he said the committee remains committed to ensuring the efficient execution of the initiative in line with its core objectives.

The chairman added that the objectives include enhancing local refining, reducing foreign exchange exposure, and stabilising the domestic fuel supply.