Naira for crude policy crumbles, Dangote begins sale in dollars
Sopuruchi Onwuka
The highly applauded Naira-for-crude programme which was severally advertised on industry policy platforms as one of the most credible economic stabilization interventions of the current administration of the federal government to contain galloping inflation may have collapsed.
Nigeria’s biggest local refiner, Dangote Petroleum Refinery, on Wednesday declared suspension of sale of petroleum products in local currency, citing mismatch in the value of dollar denominated crude oil feedstock and Naira denominated supply to the domestic market.
The Oracle Today reports that Dangote Petroleum Refinery is located in free zone, limiting its control by local regulators and compliance to domestic policies. Besides, the Naira-for-crude policy is a mere intervention by the president to cushion the impact of the acute foreign exchange squeeze in the economy on local prices of petroleum products.
The Naira-for-crude programme is also directly dependent on the ability of the Nigerian National Petroleum Company (NNPC) Limited to meet feedstock demand from growing number of refiners in the domestic downstream processing industry.
Dangote inferred directly that it is no longer getting enough delivery of feedstock from the NNPC Limited, leading to import of crude from the dollar denominated international market.
It stated in a widely circulated release that the decision to temporarily suspend naira for petroleum supplies to the Nigerian market is necessary to avoid mismatch between its sales proceeds and its crude oil purchase obligations.
Dangote noted that it has been suffering acute volume mismatch in the value of supplies to the domestic market and the value of crude oil it received from the NNPC Limited.
“As a result, we must temporarily adjust our sales currency to align with our crude procurement currency,” Dangote declared in the release.
In pledging commitment to the efficient and sustainable supply of fuels to the domestic market, Dangote Refinery said it would promptly resume products sale in Naira upon receipt of allocation of Naira-denominated crude cargoes from the NNPC Limited.
