Aliko Dangote, President/CEO of Dangote Industries Limited, joined 44 other prominent global thought leaders, statesmen, and intellectuals at the Bretton Woods Conference in New Hampshire, USA, on September 26-27, 2024. This high-level retreat, marking 80 years since the establishment of the IMF and World Bank, was led by IMF’s Kristalina Georgieva and World Bank’s Ajay Banga. The meeting aimed to reflect on the origins of the Bretton Woods institutions and discuss their future direction amidst evolving global economic challenges.
Naira-for-Crude Deal Stalls Despite October 1 Agreement Between NNPCL and Dangote
Despite the much-anticipated October 1 agreement between the Nigerian National Petroleum Company Limited (NNPCL) and Dangote Refinery, the Naira-for-crude oil deal has failed to take off, raising fresh concerns over the stability of Nigeria’s energy supply and the ongoing currency challenges facing the country.
The agreement, which aimed to allow the exchange of locally refined petroleum products for Naira instead of foreign currency, was expected to ease the foreign exchange burden on NNPCL. This deal was also meant to create a more sustainable supply channel for fuel, ensuring that the newly launched Dangote Refinery would process crude from Nigerian sources while bolstering domestic supply. However, nearly a week after the official implementation date, no significant movement has occurred to operationalize the arrangement.
Officials familiar with the matter have cited procedural delays and lack of clear operational frameworks as key reasons for the stalled start. Industry insiders suggest that the practical execution of the deal has been hindered by logistical complexities, pricing uncertainties, and ongoing negotiations over payment mechanisms that align with the fluctuating value of the Naira.
The Dangote Refinery, which began operations with considerable optimism earlier this year, was expected to play a critical role in alleviating the fuel import costs that have drained Nigeria’s foreign reserves. However, sources within the energy sector point out that challenges such as currency instability, disagreement over pricing, and coordination between NNPCL and Dangote’s supply chain have hampered the project’s launch.
For Nigeria, where fuel imports continue to place heavy pressure on the economy, the failure of the Naira-for-crude deal to take off on schedule signals broader challenges in the government’s energy policy. The agreement was presented as a key component of ensuring more autonomy in the domestic fuel market while reducing Nigeria’s exposure to international price volatility and dollar demand.
While NNPCL and Dangote representatives remain optimistic, stating that talks are ongoing and progress is being made, there is concern among analysts about how long the delay will persist and what impact it will have on fuel pricing. Many are now questioning the feasibility of a Naira-based payment structure without robust currency stability measures in place.
The inability of the Naira-for-crude deal to launch on time highlights the growing need for comprehensive reforms in the oil sector, especially to address the persisting inefficiencies of fuel imports and foreign currency dependency. For the average Nigerian consumer, any further delays in stabilizing domestic fuel supply could mean continued high prices at the pump, and for the broader economy, another setback in the quest for foreign exchange relief.
Nigeria’s oil and gas industry faces a new wave of challenges as the Nigerian National Petroleum Company Limited (NNPCL) has unexpectedly shut down its Customer Express Portal, a key payment platform for oil marketers. The shutdown has sent shockwaves across the petroleum supply chain, with many experts warning that fuel scarcity is now an imminent risk in the coming weeks.
The Customer Express Portal is the main gateway used by marketers for payments into NNPCL’s account, enabling seamless financial transactions and facilitating the lifting of petroleum products. This platform has been integral to ensuring the smooth operation of the downstream petroleum sector, allowing for the timely settlement of obligations necessary to secure product allocation and distribution across the country.
In a troubling development for Nigeria’s petroleum sector, oil marketers across the country have raised alarms over illegal levies being imposed on them by union operatives at various oil depots. Despite previous efforts to abolish such practices, these illicit fees have found their way back, leading to increased costs that ultimately burden consumers.
The resurgence of these illegal levies has been confirmed by multiple sources within the oil marketing industry. Marketers report that unions at depots across the country are demanding a charge of about N1 per liter of petroleum products loaded. This levy, while seemingly small, contributes significantly to the overall cost, adding to the landing cost per liter and inflating fuel prices for end users. For an industry already grappling with fluctuating international crude prices and domestic operational challenges, these unauthorized fees only add to the financial pressures on oil marketers.
The practice of imposing these levies was banned in the past, with regulatory authorities taking steps to streamline operations and improve transparency across the sector. However, it appears that the unions, through renewed influence, have once again infiltrated the system, reestablishing a culture of extortion that many had hoped was permanently eradicated.
Marketers and industry stakeholders have expressed frustration with this development, calling on the government and regulatory bodies to take immediate action. According to reports, the illegal levies not only increase operational expenses but also contribute to inefficiencies and delays within the supply chain, affecting the availability and cost of fuel nationwide.
One marketer, who preferred to remain anonymous, explained, “It’s disheartening that after all the efforts to create a streamlined and corruption-free supply chain, we are back to this. Every additional cost, whether it’s N1 or N10 per liter, eventually affects the pump price that consumers pay. We urge authorities to act swiftly to address this challenge before it spirals out of control.”
These union activities have drawn widespread criticism, with experts emphasizing that such practices could hinder progress in the nation’s energy sector and deter investments in the downstream segment. By inflating costs through unofficial channels, the unions are effectively undermining efforts to stabilize fuel prices and improve the overall efficiency of fuel distribution across the country.
With oil marketers calling for urgent intervention, the spotlight is now on Nigeria’s regulatory bodies to step in and put an end to these illegal practices. Industry watchers hope for swift and decisive action, as continued extortion threatens to undo years of progress made towards ensuring a fair, transparent, and sustainable petroleum industry.
FG Removes VAT On Key Products To Cut Energy Costs, Boost Clean Energy Transition, And Attract Global Investments With New Tax Reforms
The Nigerian government has unveiled a bold move to reduce the cost of living by removing Value Added Tax (VAT) on key energy products, including diesel, Compressed Natural Gas (CNG), Liquefied Natural Gas (LNG), and electric vehicles. The new VAT exemption, announced by the Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, on Wednesday, is set to drive down prices and accelerate the nation’s transition to cleaner energy sources.
The VAT Modification Order 2024 covers a range of vital energy products and infrastructure, including: Diesel Liquefied Petroleum Gas (LPG) Compressed Natural Gas (CNG) Electric Vehicles Liquefied Natural Gas (LNG) infrastructure Clean Cooking Equipment According to Edun, the VAT exemption aims to reduce living costs, bolster energy security, and speed up Nigeria’s shift to greener energy alternatives. The initiative aligns with the administration’s commitment to sustainability and economic growth.
Tax Incentives To Boost Oil And Gas Investments
In a further move to drive economic growth, the government has introduced new tax incentives for deep offshore oil and gas production. The initiative, part of the Oil & Gas Companies (Tax Incentives, Exemption, Remission, etc.) Order 2024, is designed to make Nigeria’s deep offshore basin a leading hub for global oil and gas investments. Edun emphasized that these reforms are part of broader policy initiatives spearheaded by President Bola Ahmed Tinubu, aimed at enhancing Nigeria’s competitiveness in the global energy market.
The latest tax relief measures aim to position Nigeria as a key player in the global oil and gas sector, ensuring sustainable growth in the energy industry.
Exclusive Insights into the Life, Passion, and Vision of Nigeria’s Foremost Oil and Gas Expert
Festus Osifo is a renowned industry leader and philanthropist who has made significant contributions to the oil and gas sector in Nigeria. Born into a modest family, Osifo’s early years were marked by strong values and work ethic instilled by his parents . He excelled in his early education, demonstrating exceptional academic prowess, and later attended a prestigious university where he earned his degrees
Osifo’s professional journey began with challenging yet opportunities-filled job experiences that contributed to his growth and development . He quickly made a name for himself, taking on important projects and roles that showcased his skills and dedication. As the President of Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN), Osifo proclaimed a new dawn for the staff of the Association, emphasizing his commitment to their welfare
Throughout his career, Osifo has held several leadership positions, including serving as the President General of the Trade Union Congress of Nigeria (TUC) . He has been recognized for his contributions to the industry, receiving various awards and accolades . Osifo is also a member of the Nigeria Society of Engineers (NSE), Council of Registered Engineers of Nigeria (COREN), and Society for Petroleum Engineers (SPE) .
Key Achievements:
Leadership Roles: President of PENGASSAN and President General of TUC
Industry Contributions: Introduced innovative ideas and practices that transformed the oil and gas sector
Awards and Recognitions: Received various awards for his contributions to the industry
Philanthropy: Involved in charitable activities, using his resources and influence to make a positive impact
Osifo’s personal philosophy emphasizes integrity, hard work, and a commitment to excellence, guiding his actions and decisions . He believes in mentoring others, sharing his knowledge and experience to help them grow and succeed . With his vision for the future, Osifo aims to continue driving innovation and making meaningful contributions to the industry
The Nigerian National Petroleum Company Limited, NNPCL, has delivered a total of 48.6 million barrels of crude oil to Dangote Petroleum Refinery in the past 10 months, Vanguard investigations have revealed.
Details of the deliveries contained in official data on the transaction sighted by Vanguard showed that 3.4 million barrels (mb) were supplied in December 2023 while 3.5 million barrels were supplied in February 2024.
The details further showed that 3.3md, 3.3mb, 3.0mb, 5.1mb, 5.1mb, 4.8mb and 5.6 were supplied to the refinery in March, April, May, June, July, August and September 2024 respectively. The transaction has already recorded 11.7mb for October 2024 deliveries.
However, sources close to the Dangote Refinery said the volume supplied remains low when compared to the installed refining capacity of the 650,000 barrels per day plant.
The NNPCL has not yet disclosed the crude oil requirements of Nigeria’s refineries, including Dangote refinery in the last quarter (October – December) of 2024.
But in the second quarter (Q2’24) of 2024, the government put the requirements of all Nigeria’s refineries, including Dangote Refinery, at 597,700 barrels per day, indicating an increase of 114.700 barrels per day, from 483,000 bpd in the first half of the year.
The Q2’24 estimate also indicates that the NNPCL may have booked the crude oil needs of Dangote Refinery at less than 50% of the installed production capacity.
Petrol imports fall 12%
Meanwhile, the volume of Premium Motor Spirit, PMS, also called petrol fell year-on-year (YoY) by 12.6 percent to 20.29 billion litres in 2023 from 23.24 billion litres in 2022.
The National Bureau of Statistics, NBS, disclosed this yesterday in its “Petroleum Products Distribution Statistics for 2023”, noting that PMS trucks also dropped by 16.9 percent YoY to 20.22 billion litres from 24.35 billion litres in 2022.
According to the bureau, the volume of Automotive Gas Oil, AGO, also known as diesel, imported rose to 4.94 billion litres in 2023 from 3.99 billion litres in 2022.
The statistics also showed that 109.39 million litres of AGO were locally produced in 2023, representing a 6.76 per cent rise from 102.47 million litres produced in 2022.
Similarly, the volume of Household Kerosene (HHK) locally produced grew by 56 per cent YoY to 69.7 million litres in 2023 from 44.68 million litres in 2024.
However, the data showed that local production of Petrol ended in 2018 when 128.08 million litres was produced.
NBS said: “In 2023, PMS truck out stood at 20.22 billion litres, indicating a 16.96% decrease relative to 24.35 billion litres recorded in 2022.
“About 69.71 million litres of HHK were locally produced in 2023 compared to 44.68 million litres in 2022, indicating a growth rate of 56.02 percent over the period.
“For AGO, 109.39 million litres were locally produced in 2023, higher, compared to 102.47 million litres reported in 2022. This represents a 6.76 percent growth rate.
“In terms of imported products, 20.30 billion litres of PMS were imported in 2023 relative to 23.54 billion litres in 2022, showing a decrease of 13.77 percent
“Also, 4.94 billion litres of Automotive Gas Oil were imported in 2023, indicating an increase of 23.66 percent compared to 4.00 billion litres in the previous year.”
The Crude Oil Refinery-owners Association of Nigeria (CORAN) is sounding the alarm that the Nigerian National Petroleum Company (NNPC) is playing favorites with Dangote Refinery. Apparently, NNPC is prioritizing the sale of crude oil in Naira to Dangote Refinery, which doesn’t sit well with other refinery owners ¹.
Here’s the background: for over 20 years, Nigeria has set aside about 445,000 barrels of crude oil per day for domestic refining. This allocation is paid for in Naira, and the resulting refined products are sold within Nigeria. However, CORAN claims that the federal government has promised to only supply crude oil to Dangote Refinery, citing it as the only refinery producing petrol.
Domestic Refining Arrangement: 445,000 barrels of crude oil per day set aside for domestic refining ¹
Payment in Naira: Allocation paid for in Naira ¹
Exclusive Supply: Federal government promises to only supply crude oil to Dangote Refinery ¹
Eche Idoko, CORAN’s publicity secretary, revealed that the sale would commence on October 1. This development has likely raised concerns among other refinery owners, sparking CORAN’s allegations. Would you like more information on Nigeria’s oil industry or updates on this story?
