The Nigerian National Petroleum Corporation (NNPC) has requested a permanent presence at the Dangote Refinery as part of their ongoing crude supply deal.
This was revealed by Devakumar V.G. Edwin, Vice President (Oil & Gas) of Dangote Group.
He disclosed an X Space event organized by Naijaonpoint titled “Unlocking how Dangote Refinery shapes and price”, where he discussed the progress of Premium Motor Spirit (PMS) production at the refinery.
“NNPC has informed us that they intend to station a team of 6 to 10 people permanently at our refinery. They’ve asked us to provide office space for them since they will be supplying the crude, overseeing the production, and buying back the products in Naira,” Edwin stated.
This request aligns with the NNPC’s aim to closely monitor the entire process, ensuring that crude is supplied and processed efficiently while securing a steady flow of PMS for the country.
Edwin provided further information noting that the discussions with the NNPC revolve around a new model for crude supply where the refinery will buy crude from the government in Naira and sell PMS in the same currency, rather than in dollars.
He noted that the negotiations are ongoing, with critical aspects like crude pricing and the Naira exchange rate yet to be finalized.
“We are still in talks with the government about receiving crude in Naira. The discussions are ongoing, and nothing has been finalized yet. Some unresolved issues include the pricing of crude, the pricing mechanism, and determining the appropriate exchange rate for the Naira,” he said.
This shift marks a significant departure from the refinery’s original business model as a free zone company, which was designed to operate with transactions in dollars.
Edwin explained that Aliko Dangote had agreed to the federal government’s proposal to sell products from the NNPC to the government in Naira, despite the likelihood of financial losses.
According to Edwin, Dangote highlighted the critical need for foreign exchange and the deteriorating value of the Naira as key factors in his decision to proceed with the deal.
“Dangote intervened and said, ‘We are going to accept this because the country desperately needs foreign exchange, and the value of the Naira is deteriorating every day. I understand that I am going to take a loss – because, by the time we sell the product and convert it to dollars, the exchange rate may have worsened.’”
Edwin stated that in his commitment to the national cause, Dangote added, “I am willing to take this loss in the interest of the country. I don’t mind, the country is in bad shape. Someone has to take certain risks, and I am ready to face this loss, no matter how significant it may be.”