The euphoria of Nigerians over the stabilisation of fuel supply and gradual lowering of prices over the past few weeks or so, has been shattered with the decision of Dangote Refineries to “temporarily” sell products to marketers in United States Dollars instead of the Naira.
A statement released by the company on Wednesday last week read in part: “Dear valued customers, we wish to inform you that the Dangote Petroleum Refinery has temporarily halted the sale of petroleum products in naira. This decision is necessary to avoid a mismatch between our sales proceeds and our crude oil purchase obligations, which are currently denominated in US dollars.
“To date, our sales of petroleum products in naira have exceeded the value of naira-denominated crude we have received. As a result, we must temporarily adjust our sales currency to align with our crude procurement currency.”
In October last year, the Federal Government announced that the supply of crude oil to the Dangote Refinery in Naira by the Nigerian National Petroleum Company Limited, NNPCL, would last for initial six months subject to review by the Technical Subcommittee on Domestic Sales of Crude Oil in Local Currency. Dangote has resorted to purchasing crude oil from the international market following the failure to renew the crude-for Naira supply arrangement.
Industry watchers see NNPCL’s failure to renew the arrangement from two prisms. The first is that the Federal Government had pledged a large amount of our daily oil quota to international creditors. With our subsisting inability to meet our 2.2 million barrels per day OPEC quota, the NNPCL is unable to meet the Naira supply needs of our local refiners.
Some also see the lack of proactiveness in renewing the deal as part of the perceived feuds between the two domestic refiners over market control and product pricing. Dangote has always led the initiative to sell at lower prices and keep dropping pump prices.
Whatever the true story is, it is the Nigerian consumer that is negatively impacted. Nigerians celebrated the restoration of local refining of our petroleum products by our newly-built or refurbished refineries in the hope they would help in cushioning the harsh effects of total withdrawal of subsidy on petrol and other products. Indeed, they have enjoyed a measure of price reductions and looked forward to more of same.
The announcement by Dangote Refineries saw their product pump price jumping to N900 per litre from N860 in Lagos.
We urge the Federal Government to wade into this matter and ensure the renewal of the crude for Naira policy. The Federal Government owes it a duty to ensure policies that will enable Nigerians cope with subsidy removal.
NNPCL and Dangote Refinery should see each other as compatriots and compete in responsibly in the market.
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