Dangote Oil Refinery, owned by Aliko Dangote, Africa's richest man, has received a crucial boost from the Nigerian government. President Bola Tinubu has directed the Nigerian National Petroleum Corporation (NNPC) Limited to sell crude oil to the $20 billion refinery in Naira, a move expected to stabilize both fuel prices and the dollar-Naira exchange rate.
FEC approves naira-based crude dealThis decision follows the Federal Executive Council (FEC) adopting President Tinubu's proposal to sell crude to Dangote Refinery and other emerging refineries in Naira. The initiative aims to address concerns over fluctuating fuel pump prices and mitigate pressure on the Naira.
The refinery, which currently requires 15 cargoes of crude annually at a cost of $13.5 billion, will initially receive four cargoes from NNPC. The FEC's approval includes offering 450,000 barrels, designated for domestic use, in Naira, using Dangote's refinery as a pilot project.
Nigeria streamlines transactions, saves billionsThis move is expected to fix the exchange rate for the duration of the transaction and eliminate the need for international letters of credit. Afreximbank and other Nigerian settlement banks will facilitate transactions between Dangote and NNPC, reducing the country's dependency on imports and saving billions in the process.
