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Sale of Crude-in-Naira to Refineries, buy-back in Naira, begin

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In a move to fully liberalize the downstream sector, the federal government has announced that oil marketers are now allowed to buy petroleum products directly from the Dangote refinery and other local producers without going through the Nigerian National Petroleum Company (NNPC ) Limited.

This was disclosed in a statement released on Friday, which signaled the end of NNPC’s sole distributor status, and its role as an intermediary in relation to Dangote’s refinery.

The sale of crude oil in naira to national refineries and Dangote Refinery commenced in October 1, to ease petrol supply difficulties traced to the financial challenges of the NNPC.

In the new deal which has been structured to address challenges with local production and supplies, Dangote refinery will sell petrol to NNPC in naira, while petroleum marketers would have to get their supplies from the national oil company.

Wale Edun, the Minister of Finance, made these comments during the second review meeting after the launch of the implementation committee on Thursday, while also aiming at re-assessing the progress of the Naira sales initiative of crude oil and refined products.

The minister addressed the new shift, describing it as “The New Direct Purchase Model’, saying that the ‘Principal transformation under the new system is that traders of petroleum products now have the option to buy PMS directly from local refineries … “This marks a departure from the previous system where the Nigerian National Petroleum Corporation (NNPCL) had acted as exclusive buyer and distributor of PMS to the refineries.

“This direct sourcing process allows traders to negotiate commercial agreements directly with refiners, thus fostering a more competitive market landscape and facilitating a more efficient supply chain for petroleum products.

“With the launch of the local production of PMS, the market is better prepared to support these direct transactions. “This change is expected to increase the efficiency of access to products and stabilize market conditions for the benefit of all Nigerians.

Mr. Edun affirmed the determination of the commission to clarify the development and will continue to collaborate with stakeholders to ensure a smooth transition process.

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