Crude Oil Policy Unchanged: Domestic Refiners Continue To Qualify For Naira-Based Supply

There was recently a revival of false reports that triggered speculations that the Nigerian government had done away with the policy under which it used to supply the local refineries with crude oil in exchange for naira. However, the Technical Sub-Committee Chairman came out to reveal that it is false.

 

The Federal Executive Council Crude Oil and Refined Products Domestic Sales Initiative is still active, and the committee responsible for the enforcement of the initiative assured that the naira-based domestic sales deal is intact. The initiative is geared towards ensuring an uninterrupted supply to the domestic refiners, to achieve the highest utilization levels possible, and to reduce utilization of foreign exchange.

 

As opposed to what is being alleged, local refiners have not been hindered from securing local crude oil supplies. The Nigerian Upstream Petroleum Regulatory Commission is still in the process of engagement, taking into account factors including availability, demand, and market trends. The commission is also ensuring that the provisions under the Petroleum Industry Act regarding domestic crude oil obligations are being adhered to.

 

The naira domestic sales framework is designed to encourage an effective and competitive pricing system, in the end, to the advantage of the domestic refining industry. The Technical Sub-Committee is currently working on how best to implement the initiative with the aim to advance local refining capacity, reduce foreign exchange exposure, and ensure domestic fuel supply stability.

In summary, the crude oil supply to local refineries in naira remains intact, and the responsibility to ensure its smooth operation rests with the committee. The policy will certainly impact the Nigerian economy positively, and its re-validation is a clear indication of the government's move to boost the local refining industry.

 

Signed, Mr. Zacch Adedeji, Technical Sub