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President Bola Tinubu's recent directive mandates the Nigerian National Petroleum Company Limited to supply crude to the Dangote Petroleum Refinery and other domestic refineries in naira.
This move aims to stabilize the pump price of refined fuel and the dollar-naira exchange rate, as highlighted by the Special Adviser to the President on Information and Publicity, Bayo Onanuga, via his official communication channel.
Industry reports have indicated that the $20bn Dangote refinery, based in Lekki, Lagos, will consume approximately N1.7tn worth of crude oil monthly if NNPC fulfills the President's mandate.
With an expected refining capacity of 500,000 barrels per day in August, increasing to 550,000bpd by December 2024, the refinery is anticipated to refine 500,000bpd of crude oil from August to November this year, with the aim of attaining the 550,000bpd mark in December.
This translates to a daily requirement of about $41.5m worth of crude oil, equivalent to N56.55bn based on the average exchange rate of N1,362.6/$ in 2024.
Consequently, the monthly crude oil intake is estimated to reach approximately N1.7tn following the recent presidential directive.
In response to the President's order, industry operators, including Chief Ukadike Chinedu of the Independent Petroleum Marketers Association of Nigeria and Eche Idoko of the Crude Oil Refiners Association of Nigeria, underlined the importance of meeting the demand for crude oil in naira as stipulated.
They emphasised the significance of ramping up crude oil production to fulfill the President's directive and foresee potential benefits such as reducing the cost of petrol and strengthening the naira against the dollar.
According to the Publicity Secretary of the Crude Oil Refiners Association of Nigeria, Eche Idoko, selling crude in naira will not only reduce the cost of petrol but also strengthen the naira against the dollar.
Idoko said: "This move is expected to give the naira significant leverage against the dollar, leading to its appreciation. Consequently, the reduced number of naira chasing the dollar will have an impact on prices.
"The cost of refining is expected to decrease,subsequently affecting the pump price. Once the President's directive is put into effect, we anticipate a resurgence in fuel pricing."
