After a week of verbal sparring, including charges by owner/operator Aliku Dangote against “international oil companies” (IOCs)—for trying to redline Africa’s first “African-owned” oil refinery—the Nigerian government caved on July 29, and agreed to supply crude oil to the huge refinery. Just as significant, the trade will be done in the local naira currency, eliminating the need for expensive dollars on currency markets. While this may not be a total victory against the London-based oil cartel, it does represent a significant shift, being the first time since the refinery opened in January 2024, where a decision has gone in Dangote’s direction.
In a statement published by Nairametrics, the Federal Executive Commission said, “the FEC has approved that the 450,000 barrels meant for domestic consumption be offered in naira to Nigerian refineries,” and that the Dangote Refinery would be the test case. Specifically referred to are 15 “cargoes” of crude (presumably per month), of which the NNPC agreed to provide four. The agreement provides for the African Development Bank and other domestic banks to “facilitate” the currency aspect of the exchange, the statement said. The AfDB will review the agreement on a six-month schedule, to adjust exchange rates as needed.
Although the possibility that the AfDB had a hand in the decision itself can not be ruled out, this would appear to be a decision made by Nigerians, for Nigerians. The Monday meeting of the FEC was chaired by Tinubu himself, who reportedly made both the decision to sell to Dangote, as well as to use the local naira currency for transactions.
With a significant portion of its supply problems now solved, experts are saying the refinery could jump in August, going from 350,000 bpd to 500,000 bpd in August.
