By Adedapo Adesanya
There are worries about possible shortages as the Nigerian government’s plan to sell crude priced in the local currency is faltering.
In July, President Bola Tinubu directed the state oil firm, the Nigerian National Petroleum Company (NNPC) Limited, to commence sales of crude oil in Naira to local private refiners as part of efforts to boost domestic capacity and reduce foreign exchange pressure on the economy.
Last month, the committee overseeing the implementation met and it was touted that this has begun manifesting, but refiners, including the giant Dangote Oil Refinery, say they are still unable to secure adequate supplies.
“We need 650,000 barrels per day, (state oil firm NNPC Ltd) agreed to give a minimum of 385,000 barrels per day but they are not even delivering that,” said Mr Edwin Devakumar, the Vice President of the Dangote Industries Limited.
The $20 billion refinery built by Nigerian billionaire Aliko Dangote in Lagos aims to compete with European refiners when operating at full capacity but it has struggled to secure sufficient crude supplies to run optimally.
Although Mr Devakumar was light on details and did not give specific figures, he described deliveries from the NNPC under the scheme as “peanuts”.
Also speaking on behalf of a trade group of refiners, Mr Mathins Obaze, an acting executive director of the Crude Oil Refinery-owners Association of Nigeria (CORAN) said the Dangote Refinery is the only one out of eight operational refineries in Nigeria to have benefited from the naira-denominated crude sale arrangement.
“Members are still unable to access crude in naira and are currently engaging the government for a resolution,” Mr Obaze said.
The Dangote refinery in August urged the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) to enforce a rule that compels oil producers to supply local refineries.
Dangote Refinery, with a current capacity of 425,000 barrels per day and a year-end target of 85 per cent operational capacity, has turned to international markets for supplies.
It purchased two million barrels of US WTI Midland crude on Wednesday, its first US crude purchase since August. It has recently considered Saudi Arabia and Brazil’s crude
Meanwhile, NNPC is pursuing new markets for its crude oil. The company was in London on Wednesday seeking term customers for its new Utapate crude oil grade, which it plans to double production to 40,000 barrels per day next year.
Modupe Gbadeyanka