Demand For Transparency Grows Among Marketers And Refiners Amid Naira-for-Crude Initiative

Demand For Transparency Grows Among Marketers And Refiners Amid Naira-for-Crude InitiativeOil marketers and domestic refiners are urging the Federal Government to provide clarity on the recently initiated naira-for-crude deal, which officially commenced on October 1, 2024, as announced by the Federal Ministry of Finance.

The government revealed on Saturday that it had started selling crude oil and refined products in naira, a move welcomed by both the Crude Oil Refinery Owners Association of Nigeria and the Petroleum Retail Outlet Owners Association of Nigeria. However, these operators are calling for more details regarding the deal.

The Ministry of Finance confirmed the commencement of the initiative via a post on its X account, stating, “The Minister of Finance and Coordinating Minister of the Economy announced that, in line with the Federal Executive Council directive, the sale of crude oil and refined petroleum products in naira has officially begun as of October 1, 2024.” The statement also mentioned that a post-commencement review meeting took place on October 3, 2024, affirming the initiative’s launch with input from key stakeholders.

Industry Reactions

The Petroleum Retail Outlets Owners Association of Nigeria expressed approval of the initiative, emphasizing the importance of strengthening the naira for all oil sector stakeholders. PETROAN President Billy Gillis-Harry, speaking from his hometown during the ongoing elections in Rivers State, stated that after the elections, he would focus on developments in the oil sector. He noted, “We are happy and congratulate the current administration for implementing the suggestion that crude oil should be sold to Nigerian refineries in naira.”

Gillis-Harry called for transparency regarding the agreement’s details, particularly pricing, to alleviate concerns about potential fuel price hikes. He remarked, “The pricing of the crude is important as it determines the price of the commodity. We hope the details of this agreement will be made public soon because this business is central to our economy.”

Eche Idoko, the Publicity Secretary of the Crude Oil Refinery Owners Association of Nigeria, acknowledged the government’s initiative but could not provide additional information about the deal, stating, “We commend the government for this move and hope it goes smoothly.”

Government Announcements

Last month, the Technical Sub-Committee on Domestic Sales of Crude Oil in Local Currency announced that the Federal Executive Council, under President Bola Tinubu, had approved selling crude to local refineries in naira. The committee indicated that, starting October 1, the Nigerian National Petroleum Corporation (NNPC) would supply about 385,000 barrels per day of crude oil to the Dangote refinery, payable in naira.

Despite the announcement, officials from Dangote and other refineries reported being unaware of the deal’s initiation. Representatives from various regulatory bodies, including the Nigerian Upstream Petroleum Regulatory Commission and the Federal Ministry of Finance, also remained silent when contacted for updates.

The government explained that the naira-for-crude initiative aims to ease pressure on the naira, eliminate unnecessary transaction costs, and improve the availability of petroleum products nationwide. According to committee chairman Dare Adekanbi, “Crude will be sold to Dangote in naira, and in return, the Dangote refinery will supply petrol and diesel of equivalent value to the domestic market, also payable in naira.”

He further clarified that while diesel would be available in naira to any interested buyer, petrol would only be sold to NNPC, which would then distribute it to various marketers. The initiative is also establishing a streamlined approach to coordinating service provision from regulatory agencies to ensure smooth implementation.

On Saturday, the finance ministry confirmed the deal’s commencement following a meeting with critical stakeholders, which included the Minister of State for Petroleum, Heineken Lokpobiri, and executives from the Dangote Group and NNPC.

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