The Federal Executive Council (FEC), chaired by President Bola Tinubu, has approved the sale of crude oil to indigenous refineries, including the Dangote Refinery, in naira. The decision aims to reduce Nigeria’s dependency on the U.S. dollar and ultimately bolster the local currency.
The Executive Chairman of the Federal Inland Revenue Service (FIRS), Zacch Adedeji, announced the decision at the conclusion of the FEC meeting on Monday.
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He highlighted that President Tinubu has instructed the Nigerian National Petroleum Corporation (NNPC) Limited to implement this directive immediately.
Adedeji said: “The attitude of Mr President is thinking outside the box to solve Nigeria’s problem and actually to localised the solutions to Nigeria’s problem.
“He has approved through the Council that, effective immediately, that NNPC get engaged with local refineries and we are starting that with Dangote Refinery. That the sales of crude oil to Dangote Refinery be denominated in naira, and also the sales of byproducts from Dangote Refinery to distributors also be conducted in naira.“ And what does it mean to our economy? One, the pressure on foreign exchange will be reduced.
“President Tinubu is committed to innovative solutions for Nigeria’s challenges and this move to sell crude oil in naira to local refineries exemplifies this approach,” Adedeji stated. “
Adedeji explained the economic implications of this decision: “We spend approximately $660 million monthly, which amounts to $7.92 billion annually,” he noted. “With this new policy, we anticipate a reduction of at least 90% in these costs. Transactions in naira will stabilize the pump price and reduce our reliance on foreign exchange fluctuations.”
The shift to naira-based transactions is expected to save Nigeria significant foreign exchange.
“The approval by FEC will reduce our monthly foreign exchange expenditure from $660 million to a maximum of $50 million, resulting in annual savings of $7.32 billion,” Adedeji highlighted. “This will also decrease finance costs associated with opening letters of credit, which currently amount to $79 million.”
Furthermore, the FEC has approved Afreximbank as the lead arranger for transactions between the NNPC and the Dangote Refinery. This partnership is seen as a crucial step in ensuring the smooth implementation of the new policy.
“This policy is a major innovation in addressing Nigeria’s economic challenges,” Adedeji emphasised. “It will not only create more employment opportunities but also ensure greater control over one of the mainstays of our economy. We congratulate President Tinubu, the FEC, the NNPC, Dangote Refinery, and Afreximbank for their roles in making this transformative initiative a reality.”