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Dangote Refinery receives four crude oil shipments under naira-for-crude deal

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Dangote refinery crude oil

The Dangote Refinery has received four crude shipments from NNPCL under the naira-for-crude deal, marking a significant step in local refining.

 

 

The Dangote Petroleum Refinery has taken delivery of four cargoes of crude oil from the Nigerian National Petroleum Company Limited (NNPCL) as part of the ongoing naira-for-crude sale agreement.

The shipments, received over the last three weeks, mark the beginning of a programme aimed at boosting local refining capacity by supplying crude oil to Nigerian refineries in local currency.

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Also read: Dangote advocates ending crude oil mortgaging for Nigeria’s refining future

 

Sources familiar with the arrangement confirmed that more deliveries are expected as the refinery ramps up its operations.

The $20 billion refinery, located in Lekki, is now preparing to sell refined products, including petrol (Premium Motor Spirit), to domestic dealers.

This development comes at a crucial time for Nigeria’s oil industry, which has faced supply challenges.

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An official close to the Federal Government’s Technical Subcommittee on Domestic Sale of Crude Oil in Local Currency, speaking on condition of anonymity, confirmed that additional crude oil cargoes would be delivered to Dangote in the coming weeks.

The current phase of the naira-for-crude sale is set to last six months, with a potential for renewal depending on the success of the programme.

“The naira-for-crude deal has started, and so far, four cargoes have been delivered to the Dangote refinery within the past three weeks. We are still expecting more shipments in the coming week,” a senior refinery official said.

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This initiative is part of the Federal Government’s strategy to address local fuel shortages by enabling refineries like Dangote’s to access crude in exchange for naira.

The refinery, which has a capacity of 650,000 barrels per day, initially faced difficulties securing crude supplies due to international oil companies (IOCs) allegedly prioritising foreign buyers and demanding premiums above the official price.

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Dangote Group executives, including Vice President of Oil & Gas, Mr Devakumar Edwin, previously raised concerns over the reluctance of IOCs to supply crude directly to the refinery, citing inflated prices and preference for international markets.

President Bola Tinubu responded by endorsing the naira-for-crude programme in a Federal Executive Council meeting in July, with the goal of supporting local refineries and reducing reliance on fuel imports.

The NNPCL has committed to supplying 11.5 million barrels of crude per month to the refinery under the agreement, with expectations of increased availability of petrol, diesel, and aviation fuel in the domestic market.

Independent Petroleum Marketers Association of Nigeria (IPMAN) spokesperson Chinedu Ukadike welcomed the initiative, predicting that it would help stabilise fuel supply and potentially reduce prices over time as supply and demand balance out.

The refinery’s progress is closely watched, with market analysts noting a significant drop in petrol imports into Nigeria since the programme began.

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According to S&P Global Commodity Insights, petrol shipments to Nigeria fell sharply in the first two weeks of October, reflecting the impact of the Dangote refinery’s increased capacity to meet domestic fuel demand.

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As more cargoes arrive, the refinery is expected to scale up production, aiming to meet the country’s fuel needs while reducing dependency on imports.

The naira-for-crude deal remains a pivotal step in Nigeria’s efforts to enhance its energy security and economic stability.

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Massive fuel shipment and incoming vessels with goods arrive at Lagos Ports

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The Nigerian Ports Authority confirms the arrival of vessels with 40 million litres of fuel at Lagos ports, alongside ships carrying various goods.

 

 

The Nigerian Ports Authority (NPA) confirmed the arrival of two vessels carrying an estimated 40,766,400 litres of Premium Motor Spirit (PMS), commonly known as petrol, at Tincan Island Ports in Lagos on Friday.

This shipment is expected to bolster local petrol supplies and potentially impact fuel distribution across the region.

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Also read: Dangote advocates ending crude oil mortgaging for Nigeria’s refining future

 

In its daily report, the NPA also noted that an additional ten vessels, each loaded with various commodities, are scheduled to arrive at the ports between Friday, 1 November 2024, and 8 November 2024.

These vessels will carry a range of goods, including vehicles, diesel, containers, and bulk wheat.

Three of the incoming vessels will specifically deliver vehicles, with two ships carrying a total of 600 used vehicles and one vessel delivering 600 new vehicles.

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The remaining five vessels will bring in consignments such as AGO (diesel), assorted containers, and bulk wheat, reflecting the diverse import activity at Nigeria’s major port facilities.

The NPA has designated multiple terminals across Lagos for the berthing of these vessels, including the Kirikiri Lighter Terminal, Five Star Logistics, Ports & Terminal Multipurpose Limited, Josepdam Ports Service Limited, and the Tincan Island Container Terminal.

This week’s shipments follow recent updates regarding fuel pricing in Nigeria, where marketers plan to offer petrol below N1,028 per litre, closely monitoring local production costs and availability.

ALSO READ  Currency outside banks dropped to N3.7trn in July –CBN

Amid inflation and ongoing debates about workers’ minimum wage, the delivery of these essential goods will likely be of considerable interest to both businesses and consumers.

The Nigerian Ports Authority’s coordination ensures the timely arrival and efficient processing of critical imports, supporting the nation’s economy and addressing the demand for essential commodities.

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Woodhall capital partners with Afreximbank to launch $25 million SME export boost in Nigeria

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Woodhall Capital Afreximbank SME support

Woodhall Capital and Afreximbank unveil a $25M facility to support Nigerian SMEs, marking a significant step toward bridging export barriers in Africa.

 

 

In a pivotal move aimed at empowering Nigerian small and medium enterprises (SMEs) for export, Woodhall Capital, a leading financial services firm, has partnered with the African Export–Import Bank (Afreximbank) to introduce a $25 million loan facility.

This initiative, formalised at the first-ever Afreximbank SME Development Workshop and Stakeholder Engagement Programme in Lagos, signifies a vital step in enhancing market access for SMEs in Africa.

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Also read: CBN partners with Microfinance Banks to boost MSMEs growth

 

Held at the renowned Zinnia Hall, Eko Hotels & Suites, Lagos, the workshop, themed “Nurturing African SMEs: Bridging the Barriers to Export,” saw over 400 attendees, including industry leaders, financial institutions, and government officials.

In opening remarks, Kanayo Awani, Executive Vice President of Intra-African Trade & Export Development (IAED) at Afreximbank, underscored the importance of the event in supporting Nigerian SMEs to embrace trade and drive continental development.

“Collaborating with Woodhall Capital enables us to build up SMEs, which are the backbone of Africa’s economy. Beyond financing, this partnership aims to identify financial institutions capable of fostering SME growth,” Awani noted.

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With SMEs constituting 90% of business activity in Africa, Afreximbank has observed that financial access remains a major challenge. Awani highlighted that around 60% of SMEs struggle to obtain necessary financing, limiting their potential in both local and international markets.

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By providing affordable and accessible funding, this partnership intends to create lasting growth for African SMEs, she added.

In his remarks, Nigeria’s Minister of State for Finance, Dr. Doris Uzoka-Anite, represented by Alhaji Shekarau Umar, Executive Director of MSMEs at the Bank of Industry, emphasised the role of Nigerian SMEs in regional development.

“Nigeria’s vast SME population, exceeding that of 39 other African nations combined, demonstrates the strategic choice of Nigeria as the workshop’s host. Afreximbank’s role in facilitating SME access to cross-border trade is invaluable,” Dr. Uzoka-Anite remarked.

Uzoka-Anite also called on attendees to focus beyond financial barriers and address critical issues like market access and capacity-building. “Funds provided to SMEs are impactful only when paired with training that enables long-term success,” she stated.

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A wide array of experts further contributed to the discussions, including Oluranti Doherty, Afreximbank’s Managing Director of Export Development; Dr. Olayemi Cardoso, Nigeria’s apex bank governor, represented by Dr. Blaise Ijebor, Director of Risk Management at the Central Bank of Nigeria; and Ody Akhanoba, Head of SME Development at Afreximbank.

Also participating were Will Stevens, the US Consul General, represented by Daniele Jean-Pierre, Managing Director of Trade at Prosper Africa, and Fola Olowu, founder of Oriki Group, who discussed the African Growth and Opportunity Act (AGOA) and its benefits for SMEs.

The workshop delivered a range of presentations aimed at equipping Nigerian SMEs with essential tools for scaling up export operations. Panel discussions focused on creating a supportive ecosystem for SME growth and improving finance accessibility for African SMEs, with valuable insights from key industry leaders.

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Speaking on Woodhall Capital’s journey, founder Mojisola Hunponu-Wusu explained how the firm evolved from a local entity into a global institution with Afreximbank’s support.

“Afreximbank’s commitment allowed our small company to scale globally, underscoring the importance of guidance and training for any business,” she said. Highlighting the potential for African SMEs, Hunponu-Wusu encouraged participants to pursue success with a growth-oriented mindset.

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This collaboration between Woodhall Capital and Afreximbank symbolises a promising path forward for African SMEs, with the potential to transform the region’s economic landscape by bridging the financing and export barriers that have hindered SME growth across Africa.

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World Bank urges CBN to refrain from forex auctions and embrace flexibility

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CBN foreign exchange policy

The World Bank has advised the Central Bank of Nigeria to halt forex auctions and adopt a transparent framework for foreign exchange interventions to stabilise the naira.

 

 

The Central Bank of Nigeria (CBN) has been urged by the World Bank to cease its intervention in the foreign exchange (FX) market through auctions and instead adopt a flexible exchange rate system.

This recommendation was part of the Nigeria Development Update, which outlines strategies to stabilise the naira against foreign currencies.

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Also read: FG gets over $751m World Bank loan

 

On August 26, 2024, the CBN conducted a significant auction, selling $876.26 million to end users via a retail Dutch auction.

This marked a shift from the bank’s traditional sales to Bureau De Change operators and was one of the most substantial FX interventions under Governor Yemi Cardoso’s leadership.

The CBN stated that the auction aimed to enhance liquidity in the FX market, alleviate demand pressure, and support price discovery.

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The sales report indicated that 3,347 firms accessed dollars at a cut-off rate of N1,495 per dollar through 26 banks. However, the World Bank’s report highlighted that allowing market participants to trade FX with greater flexibility would deepen the FX market.

 

The report outlined several recommendations for the CBN, including:

1. Maintain a Unified Exchange Rate: The CBN should continue to pursue a unified and market-reflective exchange rate while deepening the official FX market.

2. Facilitate Formal Remittance Inflows: The bank should work towards enhancing formal remittance inflows and allow international oil companies to concentrate their FX sales in the official market.

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3. Restore Bureaux de Change Access: Efforts should be made to restore intermediated market access to bureaux de change and refrain from ad-hoc FX auctions.

4. Build Foreign Reserves: The CBN should strategically build foreign reserves to accurately determine the fair value of the naira against foreign currencies.

5. Adopt a Transparent Framework: There is a call for a comprehensive, systematic, and transparent framework for CBN FX interventions to anchor exchange rate expectations to fundamentals rather than perceived targeted rates.

The World Bank emphasised that maintaining a single, market-reflective exchange rate is vital for increasing fiscal revenues, attracting investment, and creating conditions for inclusive growth.

In related news, during the recent IMF/World Bank annual meeting in Washington D.C., Nigeria’s Finance Minister Wale Edun noted that the government has not always adhered to the policy recommendations provided by international agencies.

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He cited an example of oversubscribed domestic bonds, indicating that while advice from these institutions is valuable, it is not always mandatory to follow.

Additionally, the World Bank’s report revealed a concerning rise in non-performing loans (NPLs) in Nigerian banks, which reached 5.1% in the first quarter of 2024, slightly above the prudential benchmark of 5.0%.

This increase has been attributed to high inflation, depreciation of the naira, and a decline in the banking system’s capital buffers, which fell to 11.1% in Q1 2024 from 14.2% in Q1 2023.

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