Dangote Refinery and other local refineries are to take their first delivery of crude under the naira-for-crude deal on October, the Ministry of Finance confirmed on Monday.
The confirmation, through a statement from the federal ministry followed a July 29 directive by President Bola Ahmed Tinubu that local refineries should henceforth pay naira to access crude from the Nigerian National Petroleum Corporation Limited (NNPCL).
The Presidential order came on the heels of an approval by the Federal Executive Council (FEC) at its Ninth meeting in the year, the Executive Chairman of the Federal Inland Revenue Service (FIRS), Mr. Zacch Adedeji told reporters at the State House in Abuja.
According to Adedeji, beside the adoption of the naira as trading currency for the local operators, the President also directed the NNPCL to open talks with local refineries in naira-denominated transactions.
The FIRS boss said the presidential directive also affects the sale of products from Dangote and other refineries. Their transactions must also be conducted in naira.
He said the decision were taken to mitigate the heavy reliance on foreign exchange for crude imports, which currently accounts to between 30 and 40 per cent of Nigeria’s foreign exchange (forex) expenditure.
Adedeji emphasized that the shift will stabilise crude oil prices domestically by minimising the impact of forex fluctuations.
Yesterday’s statement from the Finance Ministry followed a meeting of the Implementation Committee on Crude Oil Sales in Naira confirmed the development.
The committee, which is chaired by the Minister of Finance and Coordinating Minister for the Economy, Mr. Wale Edun, reviewed the progress of key initiatives aimed at transitioning crude oil sales from dollar to naira for local refineries.
According to the statement, Adedeji, who doubles Chairman of the Technical Sub-Committee, provided the crucial update on the impending crude delivery.
The committee has mapped out the plan for the commencement of naira payments for crude oil transactions, with the Dangote Refinery set to start making payments in naira from October 1, 2024, the statement said.
This aligns with the broader economic strategy of the government to reduce dependency on foreign currencies in critical sectors and enhance the value of the naira,” IT added.
Key stakeholders identified for ensuring the smooth implementation of this transition include: the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), the Central Bank of Nigeria (CBN), the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) and the African Export-Import Bank (Afreximbank).
These bodies have been tasked with coordinating efforts to support the September PMS delivery under the new payment framework.
The move towards naira-based crude oil transactions is expected to have far-reaching implications for the local economy.
By anchoring such a vital economic activity in the local currency, the government aims to stabilise the naira, reduce inflationary pressures from exchange rate volatility, and strengthen the nation’s fiscal resilience. Furthermore, the decision underscores Nigeria’s commitment to leveraging domestic resources to fuel its economic growth, aligning with broader goals of self-reliance and sustainable development.
In addition to the crude delivery, the committee also reviewed progress on other key projects, notably the ongoing efforts at the Port Harcourt and Dangote Refineries.
The statement noted that significant increases in production are expected from November, signaling a boost in domestic refining capacity that could reduce the nation’s reliance on imported petroleum products.
During the committee meeting, Edun re-emphasized the need for transparency in the implementation process.
He directed the Adedeji-led Technical Sub-Committee to finalize all necessary details and prepare a comprehensive report for President Tinubu, confirming that the directives issued are on track for the September rollout.
The statement reads: “With the Implementation Committee’s progress and Mr. Edun’s guidance, Nigeria is poised to witness a seamless transition to Crude Oil Sales in naira. The collaboration among stakeholders, including regulatory bodies and financial institutions, will ensure a transparent and efficient implementation process.
As Nigeria approaches this critical economic milestone, the anticipated positive impacts on national growth and development are expected to set a new standard for economic prosperity.
“The first delivery of PMS from the Dangote Refinery is a clear indication that Nigeria is moving towards a more robust and self-reliant economic structure, one that could redefine the country’s position in the global oil market while ensuring that the benefits of its vast natural resources are felt more directly by its people.”
