The Nigerian National Petroleum Corporation (NNPC) Limited has requested dedicated office space for 10 of its staff at the Dangote Refinery as part of a crude oil supply agreement.
During a discussion hosted by Nairametrics on the topic “Unlocking How Dangote Refinery Shapes Price,” the Vice President of Oil & Gas at Dangote Group, Devakumar V.G. Edwin, disclosed that the NNPC made the request because it will be responsible for supplying crude oil to the refinery, monitoring production, and repurchasing the refined products in Naira.
“NNPC has informed us that they intend to station a team of 6 to 10 people permanently at our refinery. They’ve asked us to provide office space for them since they will be supplying the crude, overseeing the production, and buying back the products in Naira,” Edwin revealed.
The arrangement involves the refinery purchasing crude oil from the government in Naira and selling refined products like Premium Motor Spirit (PMS) in the same currency, rather than in dollars.
Edwin further explained that negotiations are ongoing with the government concerning the pricing structure for crude oil and the exchange rate mechanism to be applied. While no final agreement has been reached, Edwin noted that several critical details are still under discussion.
Speaking on behalf of Dangote, Edwin shared that Aliko Dangote had agreed to the Federal Government’s proposal to sell NNPC’s products back in Naira, even though it may result in financial losses due to exchange rate fluctuations.
“Dangote said we are going to accept this because the country desperately needs foreign exchange, and the value of the Naira is deteriorating every day,” Edwin noted. He quoted Dangote as saying, “I understand that I am going to take a loss because, by the time we sell the product and convert it to dollars, the exchange rate may have worsened. I am willing to take this loss in the interest of the country.”
Despite the risks involved, Dangote expressed his readiness to take this financial hit for the benefit of the nation, acknowledging the dire economic situation and the need for decisive action.
