Nigeria Begins Sale of Crude Oil and Refined Products in Naira
By Patience Ikpeme
The federal government has officially commenced the sale of crude oil and refined petroleum products in naira, effective October 1, 2024. This decision, announced by the Minister of Finance and Coordinating Minister of the Economy, is in line with a Federal Executive Council (FEC) directive.
The implementation committee, chaired by the Minister of Finance, conducted a post-commencement review of the initiative and affirmed its commencement with the support of key stakeholders.
Last month, the Technical Sub-Committee on Domestic Sales of Crude Oil in Local Currency announced that the Federal Executive Council had approved the sale of crude to local refineries in naira and the corresponding purchase of petroleum products in naira. NNPC was scheduled to commence the supply of 385,000 barrels per day (bpd) of crude oil to the Dangote refinery, to be paid for in naira.
The government explained in September that the naira-for-crude initiative would help reduce pressure on the naira, eliminate unnecessary transaction costs, and improve the availability of petroleum products across the country.
The implementation committee, chaired by the Minister of Finance and the FIRS boss, worked with NNPC and Dangote refinery to establish the modalities for the initiative. Crude would be sold to Dangote in naira, and Dangote refinery would supply PMS (petrol) and diesel of equivalent value to the domestic market, to be paid in naira. Diesel would be sold to any interested off-taker, while PMS would be sold to NNPC, which would then sell to various marketers. All associated regulatory costs would also be paid in naira.
A one-stop shop was established to coordinate service provision from all regulatory agencies, security agencies, and other stakeholders to ensure a smooth implementation of the initiative.
The meeting that approved the initiative brought together prominent figures, including the Minister of State, Petroleum (Oil), the Special Adviser to the President on Revenue, the Special Adviser to the President on Energy, the Chief Executive of the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), the representative of the Chairman of Dangote Group, the Vice President of Dangote Group, and the management of the Nigerian National Petroleum Company (NNPC).
The strategic initiative taken by the President Bola Ahmed Tinubu-led Administration is expected to have a lasting impact on Nigeria’s economy, fostering growth, stability, and self-sufficiency. By transitioning to a naira-based system for crude oil and refined petroleum products, Nigeria aims to reduce its reliance on foreign currency and strengthen its domestic economy.
