The Federal Government’s latest decision to introduce naira-denominated crude oil sales to Dangote and other local refineries starting on October 1, is expected to bring an end to the opaque 20-year-old Domestic Crude Allocation (DCA) scheme, a development expected to positively impact the domestic fuel supply chain and enhance transparency in the sector.

For over two decades, Africa’s biggest economy has operated an arrangement that ensures that about 445,000 barrels of crude oil per day (the nameplate capacity of Nigeria’s four government-owned refineries) are set aside from the federation’s share of oil and channelled for domestic refining.

The allocation would be paid for in naira, and the defunct Petroleum Products Marketing Company would recoup proceeds via the distribution and sale of the resulting refined products within Nigeria.

The rationale behind that was that such exclusive domestic allocation of crude oil would guarantee energy security, de-link refined petroleum product prices from volatility in exchange rates and international crude oil prices, and ensure adequate supplies of refined petroleum products in the country.

Although the scheme looks brilliant on paper, in reality, chronic financial and operational challenges in the domestic refineries often force a chunk of the 445,000 bpd to be allocated to a complex oil-for-product swap between NNPC and trading companies, an arrangement popularly called the Direct Sale Direct Purchase program.

Bayo Onanuga, special adviser on information and strategy to the president, said the African Export-Import Bank (Afreximbank) and other settlement banks in Nigeria will facilitate the trade between Dangote and NNPC.

“ To ensure the stability of the pump price of refined fuel and the dollar-Naira exchange rate, the Federal Executive Council today adopted a proposal by President Tinubu to sell crude to Dangote Refinery and other upcoming refineries in Naira,” Onanuga said on his X account on Monday.

He added, “The FEC has approved that the 450,000 barrels meant for domestic consumption be offered in Naira to Nigerian refineries, using the Dangote refinery as a pilot. The exchange rate will be fixed for the duration of this transaction.”

Zacch Adedeji, executive chairman of the Federal Inland Revenue Service (FIRS), said the sale of byproducts from Dangote refinery to distributors will also be conducted in naira.

“And what does it mean to our economy? One, the pressure on foreign exchange will be reduced,” Adedeji said.

FG to save $7.92bn

Adedeji further said that with the new approval, the foreign exchange spent on petrol will be reduced to a maximum of $50 million per month, rounding off to $600 million annually.

“This is a total reduction of 94 percent and saving us 7.32 billion,” Adedeji said.

“So, this is a major innovation in solving Nigeria’s problem permanently. Not only will it have more employment but we will definitely be in charge of one of the mainstays of our economy.

The Central Bank of Nigeria (CBN) has announced the provision of additional U.S. dollars to Bureau De Change (BDC) operators to boost liquidity in the foreign exchange (forex) market.

This decision was communicated through a circular issued by the Trade and Exchange Department of the CBN, titled TED/FEM/PUB/FPC/001/028, yesterday.

The circular, signed by Acting Director of the Trade and Exchange Department, Dr. W. J. Kanya, informed all BDC operators and the general public of the apex bank’s approval for the sale of $20,000 to each eligible BDC operator at an exchange rate of N1,590 per dollar.

The funds are intended to meet demand for eligible invisible transactions, such as personal travel allowances, business travel allowances, tuition fees, and medical bills, among other non-physical imports.

According to the CBN’s directive, BDC operators are required to sell forex to eligible end-users at a margin not exceeding one per cent above the purchase rate from the CBN. This measure aims to ensure that retail customers can access foreign exchange at fair rates, preventing undue price hikes and speculation in the retail market.

Eligible BDCs interested in purchasing the $20,000 from the CBN have been directed to make their Naira payments into designated CBN deposit accounts.

The payment confirmation, along with all necessary documentation, is to be submitted to CBN branches in Abuja, Awka, Kano, and Lagos for disbursement of the funds.

The CBN’s intervention in the forex market comes amid ongoing efforts to stabilize the Naira and provide adequate liquidity for legitimate transactions. By supplying the BDC segment of the market with additional dollars, the apex bank aims to address shortages and ease pressure in the retail segment, where individuals and small businesses often face challenges in accessing forex.

This announcement is part of a broader strategy by the CBN to manage the forex market and support economic activities reliant on the availability of foreign currency.

The sale of forex at a regulated margin also aligns with the bank’s commitment to maintaining a stable exchange rate while ensuring that BDCs remain a viable source of foreign currency for everyday transactions.

The move is expected to provide significant relief to Nigerians and businesses engaged in international trade or seeking foreign exchange for various permissible activities.

The Federal Government may spend about N236 billion monthly to subsidise the Premium Motor Spirit, popularly called petrol, that is imported through the Nigerian National Petroleum Company and the one that is solely off-taken by NNPC from the Dangote Petroleum Refinery.

On Monday, the President and Chief Executive of Dangote Group, Alhaji Aliko Dangote, called on the Federal Government to end fuel subsidies completely.

He said the removal would help determine the actual petrol consumption in the country, as his position received backing from the Independent Petroleum Marketers Association of Nigeria and the Centre for Promotion of Public Enterprise on Tuesday.

This came as it was gathered that members of the Major Energies Marketers Association of Nigeria had lifted over 50 million litres of PMS from the Dangote refinery in the past week.

Based on the revelations by major oil marketers on the cost of Dangote petrol sold to them by NNPC, the price at which NNPC got the product from Dangote, it was established that the product was being subsidised by the government through the national oil firm.

Major oil marketers stated that the product was sold to them by NNPC at N766/litre, whereas NNPC had earlier said that it got the commodity at N898/litre from the Dangote refinery.

This implies that the company subsidised the commodity by N132/litre to the marketers.

Dangote commenced the release of PMS into the domestic market on September 15, 2024, and stated that it would be pumping out 25 million litres of petrol to the Nigerian market daily.

This means that the NNPC is shouldering a subsidy of about N3.3bn daily, while in 30 days it may spend N99bn to subsidise Dangote petrol to marketers.

For imported petrol, though there are various figures on the actual volume of PMS consumed in Nigeria, the most recent figure released by the Nigerian Midstream and Downstream Petroleum Regulatory Authority put the figure at about 45.7 million litres daily.

This means that should the Dangote refinery provide 25 million litres daily, the volume of imported petrol required to meet the domestic demand would be about 20.7 million litres.

In July this year, the Major Energies Marketers Association of Nigeria revealed that the landing cost of imported PMS was N1,117/litre. The landing cost is simply the price at which the commodity lands on Nigeria’s shores.

Dealers in the sector stated on Tuesday that the landing cost of the commodity was still around the figure reported in July.

Independent marketers revealed that NNPC now sells petrol to IPMAN members at N895/litre.

The IPMAN National Publicity Secretary, Chief Chinedu Ukadike, said, “NNPC has started supplying us using the new price template of N895/litre,” he stated while expressing the need for an open market of a willing buyer and willing seller.

Before the release of PMS to the Domestic market by Dangote, NNPC was the sole importer of petrol into Nigeria, as other marketers stopped importing the product due to concerns around accessing foreign exchange.

However, some major marketers have commenced the importation of the commodity.

With the landing cost of imported petrol at N1,117/litre and a price of N895/litre sold to independent marketers by NNPC, it means the company is subsiding the product by N222/litre.

For 20.7 million litres, the national oil firm would pay N4.59bn daily and N137.86bn in 30 days.

A summation of the estimated N99bn subsidy on Dangote petrol and the N137.86bn subsidy on imported petrol means that the government through NNPC may spend about N236.86bn monthly as subsidy on PMS.

But Aliko Dangote in his interview in New York on Monday called for the complete halt of subsidy.

He said, “Subsidy is a very sensitive issue. Once you are subsidising something then people will bloat the price and then the government will end up paying what they are not supposed to be paying. It is the right time to get rid of subsidies.”

“But this refinery will resolve a lot of issues out there, you know, it will show the real consumption of Nigeria, because, you know, nobody can tell you. Some people say 60 million litres of gasoline per day.”

PMS consumption

Nigeria’s PMS consumption has been a topic of debate due to conflicting figures from different agencies. According to the NNPC, the average daily consumption in the first quarter of 2022 was approximately 64.14 million litres. Meanwhile, the Nigerian Midstream and Downstream Petroleum Regulatory Authority reported an average daily consumption of 66.8 million litres in September 2022.

However, following the petrol subsidy removal in May 2023, daily consumption significantly dropped. In May, the average daily consumption was 69.54 million litres, which decreased to 49.48 million litres in June, representing a 28.3 per cent drop. By July, the average daily consumption had further decreased to 45.74 million litres, marking a 34.61 per cent drop from the May figures.

It’s worth noting that the significant decrease in consumption after the subsidy removal raises questions about whether the reduction represents a genuine decrease in PMS consumption or a decrease in smuggling to neighboring countries, estimated to be around 15.6 million liters daily.

N766/litre to marketers

On September 16, 2024, a major marketer of PMS said major marketers got petrol from NNPC at N766/litre, stressing that some dealers would start loading the product allocated to them by NNPC from Dangote refinery. This has since commenced.

“When NNPC gives marketers allocation, they (marketers) will simply go to Dangote to pick up. The payment will be to NNPC, while NNPC in turn pays to Dangote,” the source, who spoke on condition of anonymity because he was not authorised to speak on the matter, stated.

The official added, “NNPC sells to marketers at N766/litre, NNPC buys from Dangote at N898/litre. Marketers are supposed to mobilise their trucks to Dangote, pick up products, and then take them to their stations. The cost of transporting, fees, and other logistics will be borne by the marketers.”

On September 19, 2024, it was reported that 11plc, Total Energies, AA Rano, and other marketers had begun lifting Dangote petrol from NNPC Trading Limited at the rate of N765.99/litre.

Marketers who were able to complete their payment processes on the NNPC trading payment portal commenced the lifting of petrol under the existing agreement between marketers and the refinery.

The Managing Director of 11Plc, Tunji Oyebanji, reportedly confirmed that some marketers had started lifting the products at N765.99 from the Dangote refinery through NNPC, the sole off-taker of the product.

“We were among the first marketers to complete the payment on the NNPC portal. We have no direct arrangement with the refinery. We don’t know the contractual financial arrangement between NNPC and the refinery but what I can confirm is we are buying at N765.99 from NNPC to lift Dangote petrol,” he stated.

Also, the Executive Vice President of Downstream at NNPC, Adedapo Segun, had said marketers could not purchase petrol directly from the refinery because the product is still sold at a subsidised rate.

“That is the same thing happening with Dangote. I said earlier that Dangote is a company and it is going to sell at market price,” he told Journalists.

Segun said, “The market value of PMS is still higher than what N766 or N765 or N799 that NNPC is selling. The situation has not changed there. So, NNPC’s off-taking is only because the others would not buy at the price Dangote will be willing to sell, which is reasonable.

“As soon as the price allows for it, you will see the marketers go to Dangote and buy. So, instead of saying NNPC is the only off-taker, let’s put it this way: NNPC is the only entity that is willing to offtake because NNPC has a role under the law to be the energy provider of the resort.”

The spokesperson of NNPC, Olufemi Soneye, had earlier said the refinery bought petrol from Dangote refinery at N898/litre. He said market forces now determine domestic pump prices.

“For this initial 16.8 million litres that were given to us, it was at the rate of N898,” Soneye had said.

In its reaction, the spokesperson for the Dangote refinery, Anthony Chiejina, had described the claim as “misleading and mischievous, aimed at undermining the refinery’s achievement in addressing Nigeria’s energy insufficiency.”

However, the refinery failed to disclose the price it sold the product to NNPC.

IPMAN, experts react

The Secretary of IPMAN, Abuja-Suleja, Mohammed Shuaibu, said the position of Dangote on the removal of subsidy on PMS had been long overdue, stressing that the price of the commodity was already high.

“Petrol price is already high and at times we wonder if there is still a subsidy on it. This is why many major dealers have commenced the importation of petrol. So if there is a subsidy it should be removed now that the price is already very high,” he stated.

On his part, the Director of the Centre for Promotion of Public Enterprise, Dr Muda Yusuf, characterised the high pump prices in Nigeria’s filling stations as a difficult and tricky situation.

Yusuf said the Federal Government took a hard but necessary decision to remove subsidies on oil and urged Nigerians to be more understanding of the current PMS prices from the Nigerian National Petroleum Company.

He said, “The reality is that this is a very difficult situation for the government and also for the NNPC and I hope that as citizens we will show some understanding at this time. It’s a very, very tricky situation. If we had continued on that trajectory at the end of the year, the subsidy bill that the government will be incurring will be getting close to between N8tn – N10tn.”

Yusuf explained that factors including the importation of petroleum products with a devalued naira and differences between local pump prices and those of neighbouring countries have contributed to an unsustainable practice of fuel subsidy.

“This is not sustainable,” Yusuf remarked. “The subsidy bill had risen to that level first because of the depreciation of the currency, as all the petroleum products we were consuming were being imported.

“Secondly, because the relative price between the domestic price and the price in the sub-region and especially our neighbouring countries has widened considerably. Petrol cost per litre in our neighbouring countries is between N1,300-1,500 equivalent per litre.

He added, “So, we are not only subsidising those of us Nigerians, we are subsidising the entire sub-region, even up to the Central African Republic. That is the dilemma that the government is faced with. Even at this price of N800 or N800 plus, I’m sure there is still some element of subsidy.”

Yusuf noted that while PMS price differences in countries along Nigeria’s borders fueled smuggling, it was an even greater task to police the borders, including the coastal borders.

Yusuf said, “You can imagine the incentive for smuggling and there is only so much that those who are policing the border can do because we have very wide borders. We have the coastal waters through which people can smuggle these items. It’s extremely difficult to police.”

Yusuf assessed that the Federal Government’s decision to end the oil subsidy regime was due to it being stretched to the limit in terms of what could be fiscally accommodated.

He said, “I’m sure the administration has been struggling; doing its best not to allow this price to increase. You could listen to the admission of the NNPC that is even owing suppliers.

“We are almost on the verge of bankruptcy as a result of this fuel issue. I know it’s not palatable for those of us who are citizens because many of us have also been pushed to the edge. We are already on edge.

“We have been pushed to the limit because of the cost of living, the cost of operation. But this is an extremely difficult decision that the government needs to make,” he continued.

Yusuf expressed optimism at the beginning of Dangote refinery operations and the possibility of other domestic refineries becoming active to salvage the country’s energy situation.

“We’ll be able to manage the situation better, at least not to allow this price to go beyond what has been put forward,” he said. “And if the situation improves, then maybe the price can even be further moderated.”

MEMAN lifts 50m litres

Members of the Major Energies Marketers Association of Nigeria have lifted over 50 million litres of petrol from the Dangote refinery in the past week.

Sources told one of our correspondents that about 57 million litres were lifted from the refinery which began the sale of petrol on September 15.

During a webinar on Tuesday, the Chairman of MEMAN, Huub Stokman, confirmed that major marketers have started loading the product from the 650,000-capacity refinery.

However, Stokman did not reveal whether or not the marketers were buying directly from Dangote or from the product bought by the Nigerian National Petroleum Company Limited.

“I can tell you that we have started loading PMS from Dangote refinery. Our members have lifted millions of litres from Dangote,” Stokman stated.

On pricing, the MEMAN chairman declined comments, saying the association was not in a position to discuss how much a company will sell its product.

While congratulating Nigeria on the development of its refining capacity, Stokman urged Nigerians and stakeholders to remain positive instead of engaging in unhealthy rivalry.

According to him, Nigeria is now Africa’s refinery hub with Dangote and other modular refineries coming on board.

“As Nigeria transforms into an African refining powerhouse, MEMAN celebrates the significant strides made by public and private entities alike. The opening of Dangote Refinery and the development of modular refineries represent critical steps toward securing Nigeria’s energy future.

“While initial start-up challenges are inevitable, these refineries will shape the country’s energy landscape for decades to come,” the chairman noted.

He said MEMAN remains steadfast in its commitment to ensuring the delivery of affordable, high-quality energy products in a safe, sustainable, and competitive environment.

He added, “Fair competition is critical to driving progress and innovation within the industry. We emphasise the importance of maintaining an environment where competition can thrive, as it encourages efficiency, reduces costs, and ensures consumers have access to the best possible energy solutions.

“The complex nature of the energy supply chain, especially during this period of energy transition, requires all stakeholders—public and private—to work together to drive progress. By fostering cooperation, the industry can address challenges more effectively and deliver the best possible outcomes for consumers and the nation.”

The Monetary Policy Committee of the Central Bank of Nigeria has voted to increase the monetary policy rate, which measures the benchmark interest rate, to 27.25 per cent.

The monetary policy rate is the baseline interest rate in an economy.

Every other interest rate used within an economy is built on the MPR.

Addressing journalists at an ongoing press briefing after the committee’s fifth meeting for the year at the CBN headquarters on Tuesday in Abuja, the governor of the apex bank, Olayemi Cardoso, said the committee members unanimously decided to further tighten monetary policy.

This new rate is an increase of 50 basis points from 26.75 per cent announced by the apex bank in July 2024.

The new rate reflects an 8.5 per cent increase in interest rates under the current leadership, which took office a year ago.

Cardoso said, “The committee was unanimous in its decision to further tighten policy and thus decided as follows, one: raise the MPR to 27.25 per cent.”

However, the MPC retained the asymmetric corridor around the MPR at +500 to -100 basis points and raised the Cash Reserve Ratio of deposit money banks by 500 basis points to 50 per cent and merchant banks by 200 basis points to 16 per cent from 14 per cent and retain the liquidity ratio at 30 per cent.

He added, “The MPC decided to retain the asymmetric corridor around the MPR at plus 500 to minus 100 basis points. It also raised the Cash Reserve Ratio of deposit Money banks by 500 basis points to 50 per cent from 45 per cent and merchant banks by 200 basis points to 16 per cent from 14 per cent and retain the liquidity ratio at 30 per cent.”

Financial experts had anticipated that the CBN would either hold or lower interest rates following two consecutive months of declining headline inflation.

More details soon…

What is the Dollar to Naira Exchange rate at the black market also known as the parallel market (Aboki fx)? See the black market Dollar to Naira exchange rate for 23rd September, below. You can swap your dollar for Naira at these rates.

How much is a dollar to naira today in the black market?

Dollar to naira exchange rate today black market (Aboki dollar rate):

The exchange rate for a dollar to naira at Lagos Parallel Market (Black Market) players buy a dollar for N1660 and sell at N1665 on Monday 23rd September 2024, according to sources at Bureau De Change (BDC).

Please note that the Central Bank of Nigeria (CBN) does not recognize the parallel market (black market), as it has directed individuals who want to engage in Forex to approach their respective banks.

Dollar to Naira Black Market Rate Today

Dollar to Naira (USD to NGN) Black Market Exchange Rate Today
Buying Rate N1660
Selling Rate N1665
Dollar to Naira CBN Rate Today

Dollar to Naira (USD to NGN) CBN Rate Today
Buying Rate N1587
Selling Rate N1588

More Nigerians are beginning to embrace the rail transportation system as revenue rose to ₦1.69bn in the second quarter of 2024, reflecting a 53.14 per cent increase compared to the ₦1.10bn recorded in the same period of 2023.

This data was disclosed by the National Bureau of Statistics in its report released on Thursday.

In 2023, the Nigerian Railway Corporation generated ₦1.07bn as revenue from passengers.

According to the report, a total of 689,263 passengers travelled by rail in Q2, representing a growth rate of 45.38 per cent compared to 474,117 passengers in the corresponding quarter of 2023.

The volume of goods transported via rail also saw a significant increase, with 143,759 tons moved in Q2 2024, up from 56,936 tons in Q2 2023.

Additionally, the Nigerian Railway Corporation reported a volume of 5,940 tons of goods transported through pipelines in Q2 2024, an increase from the 2,856 tons recorded in the same period of the previous year.

Revenue from goods conveyed via rail stood at ₦537.36m in Q2 2024, a remarkable increase of 206.68 per cent compared to ₦175.22m in Q2 2023. The movement of goods through pipelines also contributed to revenue generation, with ₦42.08m collected in Q2 2024, compared to ₦12.81m in Q2 2023.

Other revenue receipts amounted to ₦994.68m in Q2 2024, representing a staggering increase of 5,206.68 per cent from the ₦18.74m recorded in the corresponding period of last year.

In the first quarter of 2024, Nigeria spent 2,470 per cent more on railway debt servicing than it made from rail service revenue.

The Nigerian Railway Corporation recorded record revenues of ₦2.12bn in the first half of 2021, an increase of 31 per cent over the same period in 2019, which recorded the previous record revenue.

At the same time, revenue from freight transport was down, with gains coming mainly from passenger transport between Lagos and Ibadan on the new standard gauge.