In a landmark move, the Federal Government and Dangote Refinery have reached an agreement to pay for crude oil supplied to the refinery in local currency. This deal enables Africa’s largest oil refinery to receive up to 24 million barrels of crude oil throughout October and November, as the 650,000 barrels-per-day facility ramps up its operations.

According to a report by Bloomberg on Monday, the Dangote Refinery, located near Lagos, is expected to take in up to 400,000 barrels of crude daily over the next two months. The arrangement represents a significant development in the import and export markets of the region, marking a transformative moment for the plant.

The Presidential Committee on the Sale of Crude Oil and Refined Products previously announced that NNPC Limited would begin supplying approximately 385,000 barrels of crude oil daily to the refinery starting October 1, 2024.

In a statement, the Federal Government confirmed, “From October 1, NNPC will commence the supply of about 385kbpd of crude oil to the Dangote Refinery, to be paid for in Naira. In return, the Dangote Refinery will supply PMS (premium motor spirit) and diesel of equivalent value to the domestic market, also payable in Naira.”

The agreement further specifies that diesel will be available for sale in Naira to any interested buyers, while premium motor spirit (PMS) will be sold exclusively to NNPC, which will then handle its distribution to various marketers. All associated regulatory costs will also be settled in Naira, simplifying transactions and fostering a streamlined local currency-based trading model.

This development is seen as a key step in enhancing local content, supporting the domestic energy market, and reducing the reliance on foreign currency for the oil trade in Nigeria.