- Reports had emerged on Monday that the The Nigerian National Petroleum Company (NNPC) Limited had stopped the Naira-based crude oil supply arrangement it had with local refiners.
The Federal Government has debunked reports that it has discontinued its policy of selling crude oil to local refineries in naira.
The Technical Sub-Committee on the implementation of the Federal Government’s policy on domestic sales of crude oil and refined products in naira denied the abrogation of the policy.
Reports had emerged on Monday that the The Nigerian National Petroleum Company (NNPC) Limited had stopped the Naira-based crude oil supply arrangement it had with local refiners.
As a result, domestic refineries will now be forced to source crude oil from international suppliers and pay in dollars rather than naira. The situation is expected to increase production costs, which could ultimately lead to higher fuel prices at the pump and further weaken already struggling naira.
According to sources, NNPC has already informed refineries that it has forward-sold all its crude oil, despite the country’s increased crude production since the deal was introduced.
But in a statement signed by the Chairman of the committee, Zacch Adedeji said there was no iota of truth in the reports making the rounds, noting that the policy is still in place.
He stated that reports are not in tandem the realities of the ongoing work under the Federal Executive Council Initiative on Domestic Sales of Crude Oil and Refined Products in Naira.
The statement said, “Our attention has been drawn to reports doing the rounds and suggesting that the naira-based crude oil supply arrangement with local refineries has been discontinued, forcing the domestic refineries to rely solely on international crude purchases.
“These reports do not reflect the realities of the ongoing work under the Federal Executive Council Initiative on Domestic Sales of Crude Oil and Refined Products in Naira.
“As the committee driving the implementation of this laudable initiative, we wish to provide an update on the Federal Executive Council initiative and confirm as follows:
“The Naira-Based Domestic Sales Framework Remains in Place
“The policy framework enabling the sale of crude oil in naira for domestic refining remains in force. The initiative was designed to ensure supply stability and optimize the utilisation of local refining capacity. There has been no decision at the policy level to discontinue this approach nor is it being considered. After implementing the policy for some months, evidence abounds that it is the right way to go and it will continue to help the economy.
“Local Refineries Have Not Been Excluded from Domestic Crude Supply
“The engagement process for crude oil supply to domestic refineries therefore remains in place by structured agreements, balancing factors such as availability, demand, and market conditions. There is no exclusion of local refineries from access to domestic crude. The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) is actively ensuring compliance with the Domestic Crude Oil Obligations provisions of the Petroleum Industry Act.
“The Initiative Supports Competitive Pricing and Market Efficiency
“The framework for domestic crude transactions is designed to promote a competitive and efficient pricing environment.
“The Committee Continues Its Work on Strengthening Implementation
“We remain committed to ensuring the efficient execution of this initiative in line with its core objectives – enhancing local refining, reducing foreign exchange exposure, and stabilising the domestic fuel supply,” the statement said
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