The Chief Executive Officer (CEO) of Dangote Petrochemical Refinery, David Bird, said on Wednesday that the Federal Government is the primary beneficiary of the Naira-for-crude swap deal, highlighting foreign exchange gains from the strengthening of the naira as the government’s main advantage.
Bird, who disclosed this on Arise Television’s “The Morning Show”, argued that the federal government had made more money from the deal, which has ensured foreign exchange stability and de-dollarisation of the economy, and strengthened the naira.
“Crude-for-Naira is not there to benefit the Dangote Refinery. The deal is to provide resilience to foreign exchange. It is for the benefit of the country to process domestic crude in a domestic currency, “Bird said.
He affirmed that the swap deal helped the Nigerian economy to rely less on dollars for its transactions and stabilise the foreign exchange market, which had previously experienced volatility.
“The deal wasn’t put in place to benefit Dangote Refinery, as we still purchase at international crude rates and at international pricing template, although without foreign exchange problems, “Bird stated.
The CEO further expressed regret over the inability of the Nigerian government to meet its domestic crude allocation contract-agreement, despite paying the international benchmark pricing cost.
“The government needs to be more transparent in its crude allocation to the company to meet domestic consumption. Currently, we get five cargoes monthly allocation as against 13-15 cargoes monthly pre-agreed contract. The 13-15 cargoes monthly is what is required to meet the domestic consumption, which we are not getting currently,” he stated further.
Bird explained that the shortfall from the government had prompted the company to buy at a higher cost at the international crude market, while urging the government to maintain the pre-contract agreed terms on crude allocation.
“Not only do we not get the full pre-contract allocation, but we also don’t get the crude grade preferences. However, given our preference for Nigerian grades, we find them at a $18 higher price premium in the international crude market despite being denied the full domestic allocation at home.
He noted that the global test for crude had given much preference for the Nigerian crude in the international market
He suggested that the Nigerian National Oil Company should have more strategic reserves in partnership with industries to think ahead to manage uncertainties like the United States-Iran War.
“Disruptions in supply chains are conversations that must be sustained in gas, coal, critical minerals and the government has to lead the role in thinking the unthinkable.
The ICIR reports that the United States-Iran conflict has put intense pressure on Nigerians buying fuel at an average of N1,400 currently in several parts of the country.
According to oilprice.com brent crude currently sells for $100 per barrels leaving more money in the hands of the Nigerian government, with most Nigerians tightening their belt to adjust to the rising transport and food costs.
This is even as Nigerians continue to seek pricing-relief from the government, with transport costs and other logistics going higher by the day.
Harrison Edeh is a journalist with the International Centre for Investigative Reporting, always determined to drive advocacy for good governance through holding public officials and businesses accountable.