In a significant development, Nigeria has started selling crude oil to the Dangote Refinery and various local firms using its currency, the naira. This bold decision represents a major advancement in strengthening the country’s economic resilience and decreasing reliance on foreign currencies. The program also seeks to promote Nigeria’s autonomy in the oil industry. With this updated agreement, the Dangote Refinery will purchase crude oil and subsequently provide petrol (PMS) and diesel to the local market, with both commodities priced in naira.
The policy was officially announced by Wale Edun, Nigeria’s Minister of Finance and the Coordinating Minister of the Economy, effective October 1, 2024. According to Edun, this action aligns with the Federal Executive Council’s (FEC) earlier directive, which was approved in July 2024. He highlighted that this measure is essential for the Nigerian government’s objective to stabilise the economy, boost growth, and promote development. An exclusive meeting led by Edun evaluated the advancement of the initiative in the sales of crude oil and refined products in naira.
NNPC will distribute fuel to various marketers throughout Nigeria.
Among those present were Heineken Lokpobiri, the Minister of State for Petroleum; Edwin Devakumar, the Vice President of Dangote Group; and Mele Kyari, the Group Chief Executive Officer (GCEO) of the Nigerian National Petroleum Corporation (NNPC). Additionally, delegates from important regulatory agencies and the Federal Inland Revenue Service (FIRS) attended. These conversations created an opportunity to strengthen the operational structure and guarantee the effective implementation of the policy. With the updated agreement, the Dangote Refinery will offer diesel in Naira to any buyer, while petrol (PMS) will be sold solely to the NNPC.
Subsequently, the NNPC will distribute this fuel to various marketers throughout Nigeria. The expenses related to regulations faced by entities like the Nigerian Ports Authority (NPA) and the Nigerian Maritime Administration and Safety Agency (NIMASA) will be settled in naira, thus guaranteeing that the entire supply chain reaps the advantages of transactions conducted in the local currency. Edun commended the effort, labelling it a significant milestone for President Bola Ahmed Tinubu’s administration. He emphasised that this initiative is anticipated to create enduring and transformative effects on Nigeria’s economy, stating,
Nigeria’s dependence on foreign currency will be reduced.
This courageous action will encourage development, stability, and independence, particularly as the nation deals with the intricacies of international markets. This tactical choice sets Nigeria up for future success. Financial analysts and sector professionals have praised the initiative, acknowledging its ability to ease the strain on Nigeria’s foreign reserves notably. By trading crude oil and processed goods in naira, Nigeria can diminish its dependence on foreign currency, thus decreasing the need for U.S. dollars. A decrease in the need for dollars may contribute to a steadier naira, aiding in the management of Inflation and stabilising fuel costs, which have been erratic and inflation-inducing over the past few years.
The initiative aims to not only enhance the stability of the local Economy but also to directly assist consumers by offering more consistent and potentially reduced fuel prices. This will be especially significant for Nigerians who have faced variable fuel expenses due to the erratic exchange rate between the naira and the U.S. dollar. Additionally, the program is anticipated to generate employment opportunities, enhance local Manufacturing efforts, and lower expenses for companies involved in the petroleum sector.
Related Article: Aliko Dangote supports Fuel Subsidy Removal
Nigeria plans to price crude oil and refined products in naira, which aims to bolster its currency, curb inflation, and stabilise fuel costs. This innovative approach is projected to transform Nigeria’s economic environment, paving the way for a more stable and self-reliant future for its citizens. Amid the complexities of the global market, Nigeria is undergoing a crucial transformation that could pave the way for enduring prosperity and stability. This revised approach marks a decisive move towards fostering economic strength, laying the groundwork for sustainable advancement that serves both the nation and its citizens.