In a major economic development, the Federal Government of Nigeria has entered into a landmark agreement with the Dangote Refinery to pay for crude oil in local currency (Naira). This historic deal allows Africa’s largest refinery, with a capacity of 650,000 barrels per day, to receive a staggering 24 million barrels of crude oil over October and November 2024. The move represents a transformative shift in Nigeria’s oil industry and is expected to have a significant impact on the region‘s import and export markets.
According to Bloomberg, the refinery, located just outside Lagos, will process up to 400,000 barrels of crude daily in the coming months. The refinery’s operations have the potential to reshape Nigeria’s energy sector and reduce the country‘s dependency on imported refined products. This agreement underscores Nigeria’s commitment to boosting local production capacity, enhancing energy security, and promoting economic stability.
The Presidential Committee on the Sale of Crude Oil and Refined Products recently confirmed that NNPC Limited would begin supplying 385,000 barrels of crude oil per day to the Dangote Refinery starting October 1, 2024. The agreement, a first of its kind, stipulates that the transaction will be settled entirely in Naira. This shift away from foreign currency payments aligns with the Federal Government’s efforts to bolster the value of the Naira and reduce Nigeria’s reliance on the US dollar for oil transactions.
A government spokesperson elaborated, stating: “From October 1, NNPC will commence the supply of about 385,000 barrels per day (kbpd) of crude oil to the Dangote Refinery, to be paid for in Naira. In exchange, the Dangote Refinery will provide premium motor spirit (PMS) and diesel of equivalent value to the domestic market, also payable in Naira.” This mutually beneficial arrangement is expected to ease fuel scarcity and stabilize prices in the local market, providing relief to consumers.
The agreement has been widely praised as a strategic move to strengthen Nigeria’s economic resilience. By encouraging the use of the local currency for significant transactions, the government aims to reduce pressure on the foreign exchange market and create a more stable economic environment.
Trending discussions across social media and economic forums highlight the potential benefits of this partnership, emphasizing how it could reshape Africa’s energy landscape. The Dangote Refinery’s increased output, coupled with this innovative payment mechanism, marks a bold step towards economic self-sufficiency and energy independence for Nigeria.
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