Nigeria’s government gave approval for NNPC Ltd to sell crude directly to the Dangote refinery starting immediately, a cabinet member said just as fuel queues lengthened across major Nigerian cities on Monday after NNPC faced problems supplying products to local oil marketers and depots. The $20 billion Dangote refinery, Nigeria’s main oil refinery and billed to be the largest in Africa at full throttle, started production in January but has struggled to secure enough crude to meet its 650,000-barrel-per-day capacity. The cabinet gave the nod for NNPC Ltd. to start selling crude to Dangote and other local refinery immediately, Zacch Adedeji, who is a member of the cabinet as chairman of the Federal Inland Revenue Service (FIRS), told reporters.
The refineries will also be able to sell refined fuels to local marketers in Naira, he said. Dangote previously had to buy oil on the international market but it filed a complaint saying oil majors were blocking its access to locally produced crude oil by selling it above market price or claiming it was unavailable, forcing the refinery to rely on expensive imports. Earlier this month, Nigeria’s oil regulator struck a deal with producers to allow sales of crude oil to domestic refiners at market prices as it sought to end a supply dispute that had strained relations with the oil majors.
It will be recalled that last year President Bola Tinubu’s government opened up petroleum products imports to private companies but foreign currency shortages and a cap on the price of petrol has mean that NNPC remains the only importer. Nigeria’s new Dangote Refinery is yet to start processing gasoline. “The NNPC Ltd wishes to state that the tightness in fuel supply and distribution witnessed in some parts of Lagos and the Federal Capital is as a result of a hitch in the discharge operations of a couple of vessels,” Olufemi Soneye, NNPC spokesperson said in a statement over the weekend when queues began forming. Fuel prices at filling stations have risen to over N800 from around N617 per litre in May 2023 when the government announced it was ending gasoline subsidies. The price surge has added to already high inflation in Nigeria and a cost of living crisis. The NNPC Ltd owes petrol suppliers over $6 billion, thus affecting supplies, and is seeking to raise financing to settle the debts.
