Crude Oil Sales: No More Business As Usual For NNPCL; Tinubu Moves Stabilise To AFEM

By Suleiman Umaru

 For years, past and present Group Managing Director, GMD, of Nigerian National Petroleum Corporation, NNPC, now rebaptised Nigerian National Petroleum Company Limiteed, NNPCL, have supervised the sales of the various grades of Nigerian Crude-Bony Light, Bonga, Qua Iboe and Forcados in the International Oil market.

This may have encouraged the NNPCL officials, to spend the country’s Crude oil sales and Foreign Exchange realized anyhow. Many had expected former President Muhammadu Buhari to know that, who incidentally was the minister of Petroleum Resources to know that something was wrong for the eight years he occupied the office.  

This is because Nigeria was losing billions of dollars due to unaccounted Crude oil sales.  The situation was so bad that Nigerian government could not fund the Autonomous Foreign Exchange Market as expected leading the continuous slump of the naira as operators in the Parallel, popular Black market take advantage to dictate the country’s forex market.

President Bola Ahme Tinubu who incidentally was a former governor of Lagos state who may have observed the happenings in in NNPCL, over the last eight months with regards to the sales of the country’s Crude oil and  discovered that the country was losing billions of the North American country of the Unied States, US, dollars, to a ‘cabal and deities’’ that he has directed that the removal of the Mele Kolo Kyari led NNPCL as the sole collector of the revenue generated from the country’s Crude oil sales.

Cardaso” Governor, CBN

The President was said to have directed that the crude oil sales forex proceeds should be ‘’deposited directly to the Central Bank of Nigeria, CBN’’, under the close watch of Olayemi Michael Cardoso.  The company was said to have made a total sum of $20.44 billion and earned operating profit of $1.61 billion, in 2022, which Finalysts had said was enough to fund the Nigerian foreign exchange market but it was said to have been frittered away without achieving the desired purpose.   

Many believe that the former Lagos state governor’s determination ‘’to get Nigeria’s economy out of the woods’’, may have informed why he took the bold initiatives to clip the wings of NNPC officials.  Under the new  Crude sales arrangement that had been introduced by the Tinubu’s Administration the Nigerian oil octopus was said to have been mandated  ‘’to submit  all receipts of Crude oil sales to the buyers in the international oil market to the CBN, for thorough vetting  and documentation’’.

 Recall that in January, 2024, NNPCL, was said to have sold 792,000bpd while the scheduled loadings for crude sales in the month of February, was put at about 65,000bpd. Senator Heineken Lokpobiri, minister of State, Petroleum Resources had said that the present government‘s commitment is to boost the country’s crude oil production to two million barrels per day.

The minister may have gladdened the heart of Nigerians when he declared hat this 2024 and beyond, that the government will ensure that the country produce not just 1.7 million barrels per day needed to generate foreign exchange revenue to fund the budget   but to produce what is needed to meet demand of PortHarcourt, Dangote and other local refineries in the country.    

 Analysts noted that that the Nigerian President may have taken the bold initiatives’’ to rectify the historical lack of scrutiny of foreign exchange realized from Crude oil sales. The Company’s sole management of the country’s crude oil sales andnue generated. This may have informed why the company had acquired a 20% stake in the $19 billion Dangote Refinery designed to process 650,000 b/d, for $2.76 billion through a $1.036 funding from Lekki Refinery Funding limited. $1 billion was said to have been paid by the stae owned company  to Dangote Refinery while $36 million was for transaction costs.  That much was contained in the company’s audited report of 2022.

The Nigerian oil company was said to have pledged as repayment for the loan 35,000b/d .As a prelude to or repayment of the multi-million dollar loan,  the state owned oil company  , according its audited 2022, report,  had entered into a Forwad  SALE  agreement with Lekki Refinery Funding Limited to supply 35,000b/d of crude oil , per day  for the settlement of $1.036 billion funding  already  received  for the Financing  of the investment  in Dangote Refinery. The interest rate on the alleged facility which is a 3-month LIBOR and an additional 6.125%, according to informed sources had commenced on August, 2023.

NNPCL Authorities may have taken advantage of the management of the country’s crude oil sales to give Dangote Refinery a suspicious   $2.5 per barrel discount on the official selling price in the international oil market and 100% of any dividend declared by the refinery throughout the repayment period.

More worrisome was the $3.3 billion that was been said to have also borrowed by the company   which former Vice President Atiku Abubakar, during Obsanjo’s Administration and Presidential Candidate of the Opposition People’s Democratic Party, PDP, had in the February 25, 2023, Presidential election had said  will require  the country  to pay back a total sum of $12 billion  in the near feature.


Given pressure  on NNPCL from several quarters on it should take the $3.3 billion loan  from the African Export-Import Bank, Afrximbank, Femi Soneye , Chief  Corporate Communications Officer,  who may have spoken the mind of Kyari, the Chief Executive Officer, CEO,   had said that the deal  , christened ‘’Gazelle’’, the Forward sale  of crude oil, was to ultimately provide  the US  dollar financing  to the government to stabilize  the country’s  volatile  foreign exchange  market.

The deal had come over a year after the company had secured a $5 billion Corporate finance commitment from the same Afreximbank to fund major investments in the country’ upstream sector.

 Soneye, NNPCL, Corporate Communications Officer was said to have repeatedly told those that cares to listen   that the US, $3.3 billion loan, was needed as a short   to mid-term solution to the foreign exchange shortage challenge currently being experienced in the country.  He had said that Nigeria neede  ‘’to urgently  improve its  foreign exchange position , pointing  out that as at June , 2023, barely one month after Buhari left office , the CBN,  had over  $6  billion  of unmet obligations  to forward contracts  with third  party institutions that had expired.

He had said that these inflows   of foreign exchange into the country   will ensure stability in the AFEM. This is because the forward sale contracts   will help the NPCL and other resource-financing companies to deliver significant upfront funding for new projects before eventual   production and export.

According to him, with Nigeria, having over 35 billion barrels of proven reserves that need to be exploited and produced for export, a fraction of the revenue generated would be used to raise the required funding of the country’s official exchange rate market.   

Godwin Emefiele , a former governor of CBN,  had said in 2019, when Buhari, then Nigerian President was under  pressure from the Leadership of the World Bank and IMF,  to float the naira  that the free float  would send  ‘’the naira tumbling’’. The former CBN, governor had said tat the system of multiple exchange rates had produced the most ‘’optimal result anywhere in the world compared with other emerging markets like the free float in recent times’’.

The continuous devaluation of the naira which had seen it exchanging for N1,451.395 to the US dollar, N1,806,658.00 to a British pound sterling  and N1,544,152.00.00 to the EUR, appears to be worrisome to Tinubu’s economic management team  who were said to have given their commitment  to combating the country’s inflation , ensuring forex stability,  addressing security concerns and fostering  conducive  environment for business growth and investment.        

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