₦airaland Forum

CodeTemplar:
NNPCL as a rival should hand off anything that has to do with crude supply to Dangote.

Ofunaofu:
The Tinubu-led federal government introduced the naira-for-crude deal with the Dangote Refinery, only to undermine it by failing to supply enough crude under the arrangement. As a result, the refinery has had to rely more on internationally sourced crude purchased in U.S. dollars.

Quite the definition of sabotaging your own policy.

Fresh concerns have emerged over a possible increase in petrol price and renewed pressure on the naira following reports that Dangote Petroleum Refinery may begin selling refined petroleum products in U.S. dollars.

The development comes amid renewed tensions in the Middle East, which have pushed global crude oil prices higher and raised fears of supply disruptions in the international energy market.

Industry analysts say that if implemented, dollar-denominated sales by Africa’s largest refinery could have significant implications for fuel pricing, foreign exchange demand and inflation in Nigeria.

The reports also come as the Federal Government seeks to ensure that domestic fuel prices reflect movements in international crude oil prices.

However, the recent escalation of geopolitical tensions has reversed an earlier decline in crude prices, with benchmark oil prices rising again on concerns over global supply.

Sources familiar with the matter attributed the refinery’s reported plan to uncertainties surrounding the naira-for-crude arrangement between the Nigerian National Petroleum Company Limited (NNPC Ltd.) and Dangote Refinery.

The initiative was designed to allow the refinery to purchase locally produced crude oil in naira, thereby reducing dependence on foreign exchange and helping stabilise domestic fuel prices.

However, industry sources said crude supplies under the arrangement have fallen short of the refinery’s operational requirements, forcing it to rely more on internationally sourced crude purchased in U.S. dollars.

One source, who declined to be named because he was not authorised to speak publicly, said selling refined products in naira while buying a substantial portion of crude oil in dollars exposes the refinery to exchange-rate risks.

“If marketers continue buying in naira while the refinery purchases crude in dollars, exchange-rate losses become inevitable whenever the naira weakens,” the source said.

Analysts say a shift to dollar sales would require independent marketers to source foreign exchange before purchasing products from the refinery, increasing operating costs and exposing them to exchange-rate volatility.

Those additional costs could eventually be passed on to consumers through higher pump prices, particularly if the naira depreciates further against the U.S. dollar.

Economists also warn that increased demand for dollars by fuel marketers could put additional pressure on Nigeria’s foreign exchange market, potentially weakening the naira if foreign currency supply fails to keep pace.

Dr. Muda Yusuf, an economist, said, “It’s still too early to conclude because we are yet to hear an official position from Dangote Refinery. We need to wait for an official pronouncement before treating it as company policy.”

Yusuf, who is the Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), said the reported move should be viewed primarily as a business response to the volatility in the global oil market rather than an arbitrary pricing decision.

According to him, renewed geopolitical tensions, particularly in the Middle East, have made international crude oil prices increasingly unstable, creating challenges for refiners.

“What is most disturbing now is the volatility in the global oil market. That, for me, is the bigger issue. With that volatility, you have to adjust your price almost every month.”

He noted that the renewed hostilities involving Iran have further heightened uncertainty in the oil market, making it difficult for refiners to maintain stable domestic pricing.

“It is that volatility that is the problem. Until we have a more stable global oil environment, we may continue to face these kinds of challenges.”

Yusuf said if Dangote Refinery eventually decides to sell products in dollars, it could simply reflect the company’s strategy for managing exchange rate and commodity price risks.

“If that is the way they want to manage the volatility, then we should see it as part of their strategy for responding to the geopolitical challenges affecting the global oil market.”

However, he warned that such a policy could have implications for Nigeria’s foreign exchange market.

“If people now have to pay in dollars, that means they have to source the dollars to buy the products. That could create additional pressure on the foreign exchange market and the exchange rate.”

Naira-for-crude not a discount scheme – Expert

Oil and gas analyst, Dr. Ayodele Oni in his comment said the “naira-for-crude arrangement was never a discount scheme.”

He said, “The refinery pays international benchmark prices for Nigerian crude. What the arrangement provides is currency matching: crude purchased in naira, products sold in naira. The moment NNPC is unable to deliver sufficient naira-denominated crude, that matching collapses and the refinery is left buying feedstock in dollars while selling in naira. No commercially rational operator can carry that foreign exchange exposure indefinitely.

“The refinery has had to import substantial volumes of crude in recent months, paid for in dollars, because domestic allocations under the arrangement have consistently fallen short of contracted expectations.

“The refinery’s position is stronger than many assume. This is because the refinery sits within a free zone regime, which has historically permitted it to transact in foreign currency, particularly for exports and coastal sales.

“The counterweight is the legal tender provisions of the CBN Act and the domestic crude supply obligation under Section 109 of the Petroleum Industry Act. The unresolved tension is that the naira-for-crude framework rests on policy directives rather than an enforceable statutory scheme, so every suspension becomes, in effect, a renegotiation lever.”

He also noted that a shift to dollar sales would push marketers into the foreign exchange market in large numbers, “pressuring the naira, raising pump prices, and feeding inflation through transport and production costs.”

“I expect a political rather than legal resolution, consistent with previous episodes in which government intervention restored naira sales within days,” he added.

Oni stated that the “durable fix” is to ensure “guaranteed crude allocations backed by enforceable delivery obligations on NNPC, or a credible hedging mechanism that covers the currency gap between crude purchase and product sale.”

Global crude oil prices have declined to the $70 per barrel mark, raising fresh expectations among Nigerians that domestic petrol prices could soon be reviewed downward.

The downward slide in crude prices continued on Thursday morning as the benchmark Brent crude slipped to $70 from $71 per barrel it closed on Wednesday.

However, despite the significant drop in international oil prices, the pump price of Premium Motor Spirit (PMS) otherwise known as petrol has remained unchanged in Nigeria despite pressure from Nigerians.

The decline in crude prices comes amid concerns over slowing global demand, easing geopolitical tensions in some oil-producing regions and expectations of increased supply from major producers.

Brent crude, the international benchmark, has retreated from higher levels recorded earlier in the year to around $70 per barrel.

With the deregulation of the downstream petroleum market, movements in global crude prices are expected to influence the cost of refined petroleum products.

This has prompted consumers to question why local pump prices have yet to reflect the latest decline in the international market weeks after.

The federal government through the Ministry of Petroleum and the Federal Competition and Consumer Protection Commission (FCCPC) had called for reduction in pump prices in response to the drastic drop in crude prices.

The Executive Vice Chairman and Chief Executive Officer of the Commission, Mr. Tunji Bello, clarified that the FCCPC does not regulate or approve petroleum prices in Nigeria’s deregulated downstream sector.

“To be clear, the Commission does not regulate or approve petroleum prices in a deregulated downstream market. Our responsibility under the Federal Competition and Consumer Protection Act, 2018, is to promote competitive markets, prevent anti-competitive conduct, and protect consumers from unfair, deceptive and exploitative business practices,” Bello said.

He added that while petroleum marketers often increase pump prices almost immediately whenever global crude oil prices rise, consumers are yet to enjoy corresponding reductions despite the recent decline in crude prices.

“We are concerned that while dealers often respond swiftly by hiking pump prices whenever crude prices rise, it is curious that it is taking forever for consumers to benefit significantly when crude prices fall. Competitive markets must work fairly in both directions,” he stated.

However, there has been a pushback from marketers over the threat of sanctions even as the marketers threaten to embark on strike.

Even as the crude price slipped to $70 as of press time, even lower than the pre-war level, a litre of PMS is still sold at over N1,200 in Lagos and almost N1,300 in the other parts of the country.

Saidfx:
Mm

He is fighting for himself. He's fighting to keep his feet firm for midterm elections.
How do retailers deal with their old stock Believe politicians at your own peril. Trump is a politician

Vision101:
I'm a Nigerian and I'm not finished. Maybe you are. Trump didn't order price reduction because the market is deregulated. He simply said what Nigerian government has said. Trump can't enforce price change by fiat and so in Nigeria. This is what deregulation mean.

Vision101:
So the minister of state oil's statement is not from the government. USA doesn't regulate prices and Nigeria doesn't either. Is their any difference between an official of government making announcement after FEC meeting and the president making the same announcement. Fortunately hatred kills the hater and doesn't kill the hated.

United States President Donald Trump has directed gasoline retailers across the country to reduce pump prices without delay.

He argued that declining global crude oil prices should translate into immediate relief for American motorists.

Trump issued the directive in a post on his Truth Social platform, accusing fuel retailers of keeping prices unnecessarily high despite crude oil trading at about $68 per barrel.

“Gasoline retailers must get their prices down immediately”, the president declared, urging companies to “do what they know is right” by passing lower costs on to consumers.”

He warned that his administration would not tolerate price gouging, describing the practice as illegal and cautioning retailers that those who ignore the call to lower prices could face “big problems.”

The president also suggested that gasoline should sell for about $2.50 per gallon, insisting that Americans ought to enjoy the benefits of the recent decline in global oil prices rather than continue paying elevated prices at filling stations.

Trump’s latest intervention comes amid renewed debate in the United States over the gap between movements in crude oil prices and the cost of refined petroleum products.

Consumer groups frequently accuse retailers of failing to quickly reflect lower international prices at the pump.

Trump also turned his criticism toward California, faulting the state’s fuel tax regime for adding to motorists’ financial burden.

He argued that California’s gasoline taxes had become excessively high, claiming they were on course to surpass the value of the fuel itself if left unchecked.

According to the president, neither the federal government nor California residents should accept policies that keep fuel prices artificially high when crude oil prices are falling.

He maintained that consumers should not shoulder avoidable costs.

Daily Trust reports that Trump’s directive mirrors a similar position recently taken by the Nigerian government.

On Monday, the Minister of State for Petroleum Resources (Oil), Senator Heineken Lokpobiri, directed petroleum marketers to immediately reflect the decline in global crude oil prices in the pump prices of Premium Motor Spirit (PMS).

He argued that Nigerians should benefit from the easing of international oil prices.

While reiterating that the downstream petroleum sector remains fully deregulated, Lokpobiri stressed that deregulation should not become an excuse for profiteering.

He warned that regulators must ensure operators do not exploit consumers through excessive pricing, insisting that lower crude prices should be passed on to motorists.

The minister maintained that although the government no longer fixes petrol prices under the deregulated regime, it retains the responsibility of protecting consumers from unfair market practices.

The position also echoes recent concerns raised by the Federal Competition and Consumer Protection Commission (FCCPC), which questioned why petrol prices in Nigeria have not fallen significantly despite the sharp decline in global crude oil prices.

Following a market surveillance exercise, the Commission said refiners, depot operators, marketers and retail outlets had only implemented marginal reductions that were not commensurate with the easing of international oil prices.

FCCPC Executive Vice Chairman and Chief Executive Officer, Tunji Bello, said that although the Commission does not regulate petrol prices in Nigeria’s deregulated downstream sector, it has a statutory responsibility to protect consumers from exploitative practices.

He argued that if marketers are quick to raise pump prices whenever crude oil prices increase, consumers should equally benefit when international prices decline.

Bello warned that the Commission would investigate and sanction any operator found engaging in anti-competitive conduct, price manipulation or consumer exploitation.

georgeakins:
Send me your account details quickly.

I need to send you some money to buy breakfast this morning.

Hunger go don disorganised your brain cells

LOL....You want to buy bread for the owner of the bakery......hahahaha.
Its poor men that have accounts, I have an accountant.
But you wouldn't know how these things work.....
Account details......hahahaha

georgeakins:
It's only in Nigeria you see broke and penniless people giving advice to the rich on how to spend their money

Once again you display ignorance like a proud peacock spreading its feathers.The Chairman of the Federal Reserve earns a poor man’s salary, yet he dictates how the world’s billionaires move their money, crash economies, and print trillions.

But when Nigerians demand that Oligarchs stop hoarding wealth in a country dying of poverty, you call it "broke people advising the rich."Oga, poverty has fried your brain. Keep licking boots. Clown......

georgeakins:
Carry your wailing commot here!

Is anyone preventing you from making your own money?
Go and hustle for your own money and invest it in one struggling football club from your region

We have called him out. There is nothing you can do. He should give you the money for Kano pillars or add it to his net-worth so there can be more zero's $5,690.000,000,000,000 dollars.

Writing a whole letter to say he is not supporting Kano pillars is tasteless. He should have just stayed quiet.

georgeakins:
Why don't you invest in one of the local clubs?
Is it BUA's fault that you're penniless?