In a significant development for Nigeria’s energy sector, the Dangote Refinery will begin supplying Premium Motor Spirit (PMS) exclusively to the Nigerian National Petroleum Corporation (NNPC) starting this Sunday.
This was revealed by Wale Edun, Minister of Finance and Coordinating Minister of the Economy, during a press briefing on Friday in Abuja.
Edun’s announcement, delivered by Dr. Zacch Adedeji, Executive Chairman of the Federal Inland Revenue Service (FIRS), marks a major step in the country’s domestic fuel production capabilities.
Refinery to Start Supplying PMS, Crude Oil Deal with NNPC
Edun highlighted that all necessary agreements have been finalized, paving the way for the first batch of PMS to be loaded at the Dangote Refinery starting September 15.
From October 1, the NNPC is set to supply approximately 385,000 barrels of crude oil per day (kbpd) to the Dangote Refinery.
This exchange, which will be conducted in Naira, is expected to strengthen the domestic petroleum market. In return, the refinery will deliver PMS and diesel to the Nigerian market, also valued in Naira.
“I am glad to announce that all agreements have been completed and loading of the first batch of PMS from the Dangote Refinery will commence on Sunday, Sept. 15.
“From Oct. 1, NNPC Ltd. will commence the supply of about 385kbpd of crude oil to the Dangote Refinery, to be paid for in Naira. In return, the Dangote Refinery will supply PMS and diesel of equivalent value to the domestic market, to be paid in Naira.
“Diesel will be sold in Naira by the Dangote Refinery to any interested off-taker. PMS will only be sold to NNPC, NNPC will then sell to various marketers for now,” Edun said.
Regulatory and Operational Framework
In addition to the fuel supply agreements, Edun outlined a comprehensive regulatory and operational framework to ensure the smooth rollout of the distribution plan.
Regulatory costs, including those from the Nigerian Ports Authority (NPA) and the Nigerian Maritime Administration and Safety Agency (NIMASA), will also be settled in Naira.
To streamline operations, the government is establishing a one-stop coordination hub at the NPA’s Lagos office. This hub will integrate the efforts of regulatory bodies, security agencies, and other stakeholders, ensuring efficient management of the process.
Edun also noted that the technical committee, which was responsible for developing the initial framework, would evolve into an implementation and monitoring team. This group will oversee operations from Lagos for the next three to six months, ensuring the plan is executed efficiently.
FEC Approval: Crude Oil Sales in Naira
A key aspect of this development is the recent Federal Executive Council (FEC) approval that allows the sale of crude oil to local refineries in Naira. This move, led by President Bola Tinubu, is part of a broader effort to stabilize the Naira, reduce unnecessary transaction costs, and improve the domestic supply of petroleum products.
Edun emphasized that this initiative is expected to alleviate pressure on the Nigerian currency and streamline fuel availability across the country. The technical and implementation committees have worked closely with the NNPC and Dangote Refinery to finalize the necessary modalities for this groundbreaking shift.
The Road to Refining: A Year in the Making
This announcement comes just over a year after the commissioning of the Dangote Refinery, which has a capacity of 650,000 barrels per day. Despite initial delays and negotiations with authorities, the refinery has now reached the refining stage and is set to make a significant impact on Nigeria’s fuel landscape.
Earlier plans had suggested that PMS distribution would be open to all marketers, a position initially held by the NNPC. However, the current arrangement sees the NNPC acting as the sole buyer of petrol from the Dangote Refinery, at least for the time being.
This marks a pivotal moment in Nigeria’s bid to reduce its dependency on imported fuel and strengthen its local refining capacity. As the largest refinery in Africa, the Dangote Refinery is expected to play a transformative role in the country’s energy future.
