NNPCL Ends N24 Trillion Fuel Imports, Begins Local Procurement from Dangote Refinery

In a major shift, the Nigerian National Petroleum Company Limited (NNPCL) has ceased importing refined petroleum products, opting instead to source fuel from Dangote Refinery and other domestic refineries. This landmark decision, announced by NNPCL Group CEO Mele Kyari during the Nigerian Association of Petroleum Explorationists (NAPE) conference in Lagos, signals a new era for Nigeria’s energy sector, aligning with the conference theme: “Resolving the Nigerian Energy Trilemma: Energy Security, Sustainable Growth, and Affordability.”

Kyari emphasized that NNPCL is now fully committed to domestic fuel procurement, aiming to bolster Nigeria’s energy security and reduce the financial strain of fuel imports. This transition follows revelations by President Bola Tinubu in August, which highlighted the government’s previous expenditure of approximately N2 trillion monthly, or N24 trillion annually, on fuel imports.

Domestic Refineries to Lead Fuel Supply

With this shift, NNPCL will no longer rely on imported petroleum products, marking a historic departure from decades of dependence on foreign refineries. “Today, NNPCL does not import any product; we are solely sourcing from domestic refineries,” Kyari stated, underscoring the company’s support for local refineries like Dangote’s $20 billion facility. The shift also aligns with a broader initiative to develop compressed natural gas (CNG) infrastructure, which aims to save significant national revenue and redirect funds toward sectors like healthcare and education.

Addressing Market Competition

The move comes amid resistance from petroleum marketers who claim they can import and sell fuel below the prices of locally refined products. Kyari, however, reiterated NNPCL’s stance on supporting domestic production for long-term energy security, denying allegations that NNPCL has obstructed Dangote Refinery’s operations. “We are proud part-owners of Dangote Refinery,” Kyari noted. “Our decision to prioritize local sourcing is an informed business move that aligns with our national interests.”

Leveraging Nigeria’s High-Quality “Lamborghini Crude”

Kyari highlighted the premium quality of Nigerian crude, which he likened to “Lamborghini crude” due to its high value. However, he acknowledged that most international refineries blend Nigerian crude with lower-grade oils to reduce costs, meaning that full domestic utilization would likely result in higher prices for Nigerian consumers. “We are committed to making this high-quality fuel accessible domestically, though it may come at a premium,” he added.

Reducing FX Pressure with Naira-Based Transactions

NNPCL has also taken steps to reduce foreign exchange pressure by enabling naira-based transactions for domestic crude sales, an initiative endorsed by President Tinubu. This approach aims to curb inflation and stabilize the naira by minimizing foreign exchange needs for fuel imports. “By controlling domestic fuel supply, we’re tackling one of the largest sources of FX pressure,” Kyari explained, commending the President’s leadership on this initiative.

Commitment to Energy Security

Kyari underscored that NNPCL’s commitment to energy security goes beyond fuel availability, acknowledging that over 50% of Nigerians lack access to electricity, while 70% lack access to clean fuel. Addressing these challenges, he asserted that NNPCL is prioritizing domestic fuel production and the distribution of energy to ensure a sustainable supply for the nation.

Settlement of NNPC’s $2.4 Billion Cash-Call Debt

NNPCL also announced the resolution of a longstanding $2.4 billion debt to international oil companies, a burden that had hindered investments in the upstream oil sector. With the end of fuel subsidies, NNPCL has redirected resources back to core operations, allowing the company to maintain cash flow for joint venture projects. “The subsidy burden was a distraction. With its removal, we can now focus on sustainable energy production,” Kyari said.

Expansion of CNG and LNG Facilities by 2025

To further enhance fuel accessibility, Kyari confirmed that by the first quarter of 2025, NNPCL plans to establish 12 CNG “mother stations” and a mini-LNG plant to supply gas for power generation and CNG fueling across the country. This initiative aims to provide cleaner, cheaper fuel options, enhancing energy accessibility in underserved areas.