The Federal Government has announced that it will commence the sale of crude oil to the Dangote Refinery in naira starting October 1, 2024.
This development is a significant move toward fulfilling the Presidential Directive on Crude Oil Sales in naira, aimed at bolstering Nigeria’s economic growth and development.
The decision was finalised during a recent meeting of the Federal Government’s Implementation Committee on Crude Oil Sales in Naira, held in Abuja.
The meeting was chaired by Honourable Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun. According to a statement released by the Ministry of Finance, signed by Mr. Mohammed Manga, Director of Information and Public Relations, the committee reviewed the progress of key initiatives, including the upcoming transition to naira payments for crude oil sales to the Dangote Refinery. This marks a key milestone in Nigeria’s economic transformation efforts.
Mr. Edun underscored the importance of transparency throughout the implementation process and directed the Technical Sub-committee to finalise the necessary details and prepare a comprehensive report for President Bola Tinubu.
The Honourable Minister expressed confidence that the collaboration among stakeholders, including regulatory bodies and financial institutions, would ensure a smooth and efficient transition to naira-based crude oil sales.
During the meeting, Chairman of the Federal Inland Revenue Service (FIRS) and head of the Technical Sub-committee, Mr. Zacch Adedeji, reported that the first delivery of Premium Motor Spirit (PMS) from the Dangote Refinery is expected next month under existing agreements.
Mr. Adedeji outlined the key roles for stakeholders, including the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), the Central Bank of Nigeria (CBN), the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), and the African Export-Import Bank (Afreximbank), in ensuring the successful implementation of this initiative.
The meeting also provided updates on the Port Harcourt and Dangote refineries, with significant production increases anticipated from November 2024.
In a related development, President Tinubu has approved the use of the Nigerian National Petroleum Company (NNPC) Limited’s 2023 final dividends, which are owed to the federation, to cover the cost of petrol subsidies. Additionally, the President granted approval to halt the payment of 2024 interim dividends to the federation to support NNPC’s cash flow.
The NNPC informed the President that due to ongoing subsidy payments, it is currently unable to remit taxes and royalties into the federation account, citing a ‘subsidy shortfall/FX differential.’ A forecast from NNPC indicated that total petrol subsidy expenses from August 2023 to December 2024 will amount to N6.884 trillion, rendering the company unable to remit N3.987 trillion in taxes and royalties.
While the exact dividend amount that will be withheld or deferred remains unconfirmed, this development signals a significant financial challenge as the government navigates the complexities of subsidy management and crude oil sales.
