In a significant policy shift aimed at stabilizing fuel prices and the dollar-Naira exchange rate, the Federal Executive Council (FEC) today endorsed a proposal by President Bola Ahmed Tinubu to sell crude oil to Nigerian refineries in Naira. This was announced by the Special Adviser to the President on Social media, Olusegun Dada via his X account. The new measure, which targets enhancing local refining capabilities, designates the Dangote Refinery as the pilot for this initiative.
Under the new policy, Nigerian refineries, including the Dangote Refinery, will purchase crude oil in Naira instead of foreign currency. This decision comes as Dangote Refinery requires 15 cargoes of crude oil annually, costing approximately $13.5 billion. Currently, the Nigerian National Petroleum Corporation (NNPC) has committed to supplying four cargoes. The FEC’s approval allows for 450,000 barrels of crude, intended for domestic use, to be sold in Naira, with a fixed exchange rate applied throughout the transaction period.
The initiative is set to be facilitated by Afreximbank and other settlement banks in Nigeria, which will manage the financial transactions between Dangote Refinery and NNPC Limited. The adoption of the Naira for crude oil purchases aims to eliminate the need for international letters of credit, potentially reducing the cost burden associated with importing refined fuel.
The move is expected to have multiple implications. On the one hand, it could stabilize domestic fuel prices by reducing reliance on foreign currency and potentially lowering the costs associated with fuel imports.
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