The Federal Government has announced that sales of crude oil to the Dangote Refinery in naira will begin on October 1, 2024.
The Minister of Finance and Coordinating Minister of the Economy, Wale Edun, made this known during a meeting with the Implementation Committee in Abuja on Monday.
A post on the finance ministry’s official X (formerly Twitter) page stated that the meeting was held to assess the progress of key initiatives.
During the meeting, the government outlined key roles for stakeholders, including the Nigerian Midstream and Downstream Petroleum Regulatory Authority, the Central Bank of Nigeria, the Nigerian Upstream Petroleum Regulatory Commission, and the African Export-Import Bank.
Their involvement is aimed at ensuring a smooth implementation of crude oil sales to local refineries.
“The Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, today led the Implementation Committee meeting on the transition to crude oil sales in naira.
“The meeting reviewed progress on key initiatives, including the upcoming commencement of naira payments for crude oil sales to the Dangote Refinery starting October 1, 2024,” the statement read.
In addition, Zacch Adedeji, the Executive Chairman of the Federal Inland Revenue Service, and the Chairman of the Technical Sub-Committee reported that the first delivery of Premium Motor Spirit (PMS) from Dangote Refinery is anticipated next month, in line with existing agreements.
“The first PMS delivery from Dangote is expected next month under existing agreements,” he said.
Backstory
Nairametrics previously reported that on July 29, the Federal Executive Council approved President Tinubu’s proposal to stop NNPC from selling crude oil to local refineries in foreign currency.
The Council decided that the 450,000 barrels designated for domestic use would be sold in Naira to Nigerian refineries, starting with Dangote Refinery as a pilot.
This measure aims to stabilize both the pump price of refined fuel and the dollar-naira exchange rate.
A current report indicates that Dangote Refinery requires 15 cargoes of crude oil annually.
The Nigerian National Petroleum Corporation (NNPC) will commit to supplying four of these cargoes.
What this means
- The Federal Executive Council’s decision to sell crude oil to Dangote Refinery and other local refineries in Naira, as proposed by President Tinubu, has several key implications for Nigerians:
- This move aims to stabilize pump prices, potentially leading to lower and more predictable fuel costs for consumers.
- Conducting transactions in Naira instead of dollars could reduce pressure on foreign exchange reserves, helping to stabilize the dollar-Naira exchange rate and control inflation.
- Increasing local refining capacity will decrease reliance on imported fuel, saving billions of dollars that can be redirected to other economic areas.
- Boosting local refining capacity enhances Nigeria’s energy security by ensuring a more reliable and self-sufficient fuel supply.