Naira for crude deal not canceled, Lokpobiri insists

…as petrol retail outlet owners call for free market for petrol importation

On the heels of the ongoing controversy surrounding the naira for crude deal which commenced in October 2024, Heineken Lokpobiri, minister of petroleum resources (oil) has clarified that the deal has not been called by the government.

Under the naira for crude deal, the Nigerian National Petroleum Company Limited (NNPCL) has been made to supply domestic refineries, including Dangote refinery with crude oil with payment made in Naira.

However, the company responding to news reports of the termination of the contract on monday, announced that the contract for the sale of crude oil in Naira was structured as a six-month agreement and subject to availability, adding that the contract is expected to expire at the end of March 2025.

Speaking on the development on Tuesday in Abuja during a meeting with Petroleum Products rRetail Outlet Owners Association (PETROAN) Lokpobiri said that the government has not canceled the initiative, adding that the deal between NNPC and Dangote Refinery was the pilot scheme.

According to him, the dispute has always been about the exchange rate which is not determined by the government. “It is purely private sector issue. If you are in the upstream and you have a modular refinery next to you and the man wants to buy crude, it’s between two of you that would negotiate and agree on what price. And the person may decide to pay you either in dollars or in Naira.

“Government is not canceling it. What was taken to council was a pilot scheme where they said NNPC should be selling crude in Naira to Dangote Refinery. We’ve always encouraged people to buy crude in whatever currency. Even if you buy in Naira, it’s going to be at a prevailing exchange rate. And I do know that people have been buying crude to refine in their respective local refineries in Naira.

Read also: NNPC suspends naira-for-crude deal for Dangote, others

“We’ve always done that. So it is not true that the scheme is canceled. Not at all. That one that was taken to FEC was a scheme specifically for Dangote Refinery and they said orders will also follow. And that was why that one didn’t include the crude for Naira from IOCs and other operators. It was basically only NNPC.

“But that doesn’t mean that Dangote doesn’t buy crude from other operators. They buy. But that Naira for crude scheme was basically between NNPC and Dangote Refinery,” he said.

Lokpobiri speaking further, explained that the NNPC as a national oil company take decisions that they feel is best for Nigeria in the industry with limited government interference.

Read also: Naira-for-crude sales was a 6-month agreement, NNPC clarifies

“That doesn’t mean that we can’t call them to order from time to time because they are a national oil company. But the point I’m making here is NNPC has a measure of independence now so that they can make proper business decisions that will be best for Nigerians,” he added.

In his remarks, Billy Gillis-Harry, President of PETROAN, said that while the sector is recording growth in crude production, importation of products should not be ruled out if the country must compete favorably in a fully liberalized economy where every source of petroleum product is allowed. He advocated that while refineries are encouraged to work, importation also should be considered as one of our sources of getting product.

This he said will drive healthy competition and guarantee that the domestic prices are not above import parity thereby ensuring the best possible affordable product with sustainability of petroleum products.

According to him, “To Benefit from the Local Refining of Petroleum Products. The benefits of the local refining of petroleum products are enormous. PETROAN supports the local refining of petroleum products and requests that local refineries be encouraged to continue sustained production of refined petroleum products.

“We advocate for multiplicity of petroleum products to supply source. Dangote Refinery is doing well and NNPC is also doing well and coming up. Other modular refineries like Azikel Refinery that’s coming up in Bayelsa to do 25,000 barrels per day is coming up and we are very, very happy about that development.

“And also importation of products should no longer be ruled out because we want to be able to compete favorably in a fully liberalized economy where every source of petroleum product is allowed and we as the most critical downstream grassroots participants in the industry should be able to tell you sir, when one product is very good and when one product is affordable and how it can work.

“So we want to advocate that refineries should work and importation also should be considered as one of our sources of getting product. This will drive healthy competition and guarantee that our domestic prices will not be above import parity thereby ensuring the best possible affordable product with sustainability of petroleum products.”