Aiming to Alleviate Tensions and Support Local Refinery
In a bid to address growing tensions and support Nigeria's refining industry, President Tinubu has directed the Nigerian National Petroleum Corporation (NNPC) to sell crude oil to the Dangote Refinery in Naira. This move comes in the wake of serious accusations that NNPC and, by extension, the government have been undermining the Dangote Refinery to favor foreign interests involved in Nigeria's fuel importation.
The allegations surfaced following remarks by Aliko Dangote, Chairman of the Dangote Group, who accused influential figures of sabotaging the refinery. Dangote claimed that the “mafias” in the oil industry are even more formidable than those in the drug trade and expressed frustration with their opposition to his refinery.
These claims have fueled widespread anger among Nigerians, further inflaming public sentiment. The timing of President Tinubu's directive is seen as an effort to mitigate tensions and potentially calm the rising unrest. This unrest is exacerbated by the imminent nationwide protest scheduled for August 1st, led primarily by youth frustrated over the removal of the fuel subsidy by President Tinubu a year ago.
Under the new arrangement, the FEC has approved the sale of crude oil to the Dangote Refinery in Naira, aiming to stabilize fuel prices and the exchange rate. The Dangote Refinery, which requires 15 shipments of crude oil annually at a cost of $13.5 billion, will initially receive four cargoes from NNPC. To further support local refineries, 450,000 barrels will be allocated for domestic use.
Afreximbank and other Nigerian settlement banks will facilitate these transactions, eliminating the need for international letters of credit and potentially reducing the high costs associated with fuel importation. This strategic move is expected to provide relief to the refinery and offer some reprieve amid the current economic and political tensions.
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