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The Nigerian government, under the leadership of President Bola Ahmed Tinubu, has instructed NNPCL to sell crude oil to Dangote Refinery in naira. This directive, aimed at boosting the use of local currency in major economic transactions, represents a departure from the long-standing practice of oil sales in US dollars.
The presidential directive was made public on Monday through an official announcement on social media. Bayo Onanuga, who serves as the Special Adviser to the President on Information and Publicity, shared the information via his verified X account, formerly known as Twitter.
According to him: “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.
“Dangote Refinery at the moment requires 15 cargoes of crude, at a cost of $13.5 billion yearly. NNPC has committed to supply four.
“But 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 pilot. The exchange rate will be fixed for the duration of this transaction.
“Afreximbank and other settlement banks in Nigeria will facilitate the trade between Dangote and NNPC Limited. The game changing intervention will eliminate the need for international letters of credit. It will also save the country of billions of dollars used in importing refined fuel”.
Read also: Vested Interests Sabotaging Dangote Refinery, Kwankwaso Says
The decision to conduct oil transactions in naira could have ripple effects across West Africa and potentially the entire continent. As Africa’s largest oil producer, Nigeria’s move might inspire other African nations to consider similar policies, potentially leading to a shift in how oil trading is conducted on the continent.
This could also strengthen regional economic integration efforts and boost intra-African trade, aligning with the goals of the African Continental Free Trade Area (AfCFTA) agreement.
This policy shift is expected to have far-reaching effects on Nigeria’s economy. Economists predict that conducting oil transactions in naira could potentially strengthen the local currency, reduce inflation, and improve Nigeria’s balance of payments.
However, some experts caution that the move might also lead to increased scrutiny of Nigeria’s monetary policies by international financial institutions.
