Why The Naira-to-Crude Deal With Dangote Refinery Hit A Bump: A Closer Look

What Really Happened with the Naira-to-Crude Deal?

Listen up, folks. The Independent Petroleum Marketers Association of Nigeria (IPMAN) spokesman, Chinedu Ukadike, recently came forward to explain why the naira-to-crude deal between the Dangote Refinery and the federal government hit a snag. According to Ukadike, it wasn't just bad luck—it was speculation. Yep, you heard that right. Speculation. And it wasn't coming from just anywhere—it was coming from market jobbers who didn't want the importation of petrol products to stop.

Here's the scoop: Dangote Refinery announced that it would halt its petrol sales because the duration of the naira-to-crude deal with Nigeria National Petroleum Company Limited (NNPCL) had run out. Now, you might be wondering, "What does this mean?" Well, it means the deal where Dangote could buy crude oil in naira instead of foreign currency came to an end. And with it, the cheaper petrol prices Dangote was able to offer.

Why the Speculation Matters

In a recent interview with News Central, Ukadike made it clear that these market jobbers were throwing around numbers and creating unnecessary chaos. He emphasized that the government was reevaluating the situation, asking why they should sell crude oil to Dangote in naira if imported products could supposedly be sold for as low as ₦775.

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But here's the kicker: Ukadike pointed out that this price tag was nothing more than speculation. None of the importers were actually selling their products at that price. In fact, Dangote remains the only refinery that offers petrol products at a lower price than the imported ones. So, the speculation wasn't just baseless—it was misleading.

What the Federal Government Is Thinking

Let me break it down for you. The federal government has its hands full with international commitments. They've locked in sales of crude oil to international buyers, leaving them with a challenge to meet domestic supply needs. This naira-to-crude deal was a trial run, and it was approved by the President with the goal of making petrol products more affordable for Nigerians.

Now, here's the government's logic: If imported products could be sold at ₦775, why should they supply Dangote with crude oil in naira? But as Ukadike pointed out, this price was nothing more than a rumor. Dangote is still the cheapest option on the market. Those speculating against the deal are likely market jobbers who benefit from the status quo and don't want to see the importation of petroleum products disrupted.

To sum it up, Ukadike said, "The federal government stated their challenges of not having enough for domestic supply, as a result of their international commitment and how they have locked up the sales of crude to some international buyers. This issue of naira-to-crude was just a test run and expressly approved by Mr President to ensure that the product cost is a little bit more affordable than the imported ones."

He continued, "It was reported two weeks ago that imported products could be sold at ₦775. If that were true, the federal government would be questioning why they were supplying Dangote in naira when imported products were supposedly cheaper. But here's the thing: the speculations were wrong. None of the importers have sold their products at that price. Dangote remains the only refinery that sells petroleum products cheaper than all others, even compared to imported ones."

What's Next?

As the week unfolded, the dollar saw an increase, which changed the narrative and, consequently, the pump price. Ukadike made it clear that these speculations are thrown into the market by those who don't want to see a shift in the importation of petroleum products. But one thing is certain: the naira-to-crude deal was a game-changer, and its impact is still being felt across the board.

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So, where do we go from here? Only time will tell, but one thing is for sure—Nigerians are watching closely to see how this unfolds. Stay tuned for more updates as we continue to monitor this developing story.