Selling crude oil in Naira to Dangote Refinery and other local refineries has numerous benefits for Nigeria. Nigeria can unlock these benefits, driving economic growth, energy security, and industrial development.
Economic Benefits
- Reduced foreign exchange outflow: Selling crude oil in Naira conserves foreign exchange reserves.
- Increased government revenue: Naira-denominated transactions generate more revenue for the government.
- Boost to local economy: Local refining stimulates economic growth, creates jobs, and increases domestic investment.
Refining and Petroleum Sector Benefits
- Increased refining capacity: Dangote Refinery’s 650,000 barrels-per-day capacity will reduce reliance on imported petroleum products.
- Improved product quality: Local refining ensures higher-quality petroleum products.
- Reduced import dependence: Nigeria becomes less vulnerable to global oil price fluctuations.
*Financial Benefits*
- Reduced transaction costs: Eliminates international transaction fees and letter of credit requirements.
- Increased liquidity: Naira-denominated transactions enhance local financial markets’ liquidity.
- Better price stability: Local refining and sales stabilize petroleum product prices.
Strategic Benefits
- Energy security: Local refining enhances Nigeria’s energy independence.
- Diversification: Encourages diversification of Nigeria’s economy, reducing dependence on oil exports.
- Increased competitiveness: Local refining makes Nigerian products more competitive globally.
Dangote Refinery Specific Benefits
- Reduced logistics costs: Proximity to raw materials (crude oil) reduces transportation costs.
- Increased efficiency: State-of-the-art refinery technology optimizes production.
- Job creation: Dangote Refinery creates thousands of direct and indirect jobs.
By selling crude oil in Naira to Dangote Refinery and other local refineries, Nigeria can unlock these benefits, driving economic growth, energy security, and industrial development.
Nigeria officially commenced the sales of crude oil and refined petroleum products in naira, the Federal Government has announced.
The Minister of Finance and Coordinating Minister of the Economy, Wale Edun, on Saturday said that in line with the Federal Executive Council (FEC) directive, the sale of the products in naira commenced on October 1.
This was disclosed in a statement by the Director of the Information and Public Relations, Ministry of Finance, Mohammed Manga.
“Following a meeting of the Implementation Committee, Chaired by the Honourable Minister of Finance and Coordinating Minister of the Economy to conduct a post-commencement review of the Crude Oil and Refined Products Sales in Naira initiative, the commencement of this strategic initiative was affirmed by key stakeholders,” the statement read.
“The meeting brought together prominent figures, including the Honourable 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), led by the Group Chief Executive Officer (GCEO), Chief Financial Officer (CFO), and Executive Vice President (Downstream).”
Manga noted that the strategic initiative and bold step taken by President Bola Tinubu-led administration is expected to have a lasting impact on Nigeria’s economy, enhancing growth, stability, and self-sufficiency.
He added that the country continues to navigate the complexities of global markets, and the strategic move positions Nigeria for success in the future.
The move comes about nine weeks after the FEC approved a proposal by Tinubu directing the NNPC to sell crude oil to Dangote Petroleum Refinery and other refineries in naira.
The Federal Government had said the sale of crude oil to the Dangote refinery and other refineries in naira would commence on October 1.
The policy aims to stabilise pump prices, potentially resulting in lower and more predictable fuel costs for consumers.
With transactions in Naira rather than dollars, the pressure on foreign exchange reserves would ease, leading to the stabilization of the dollar-Naira exchange rate and control inflatio
It would also increase the capacity of local refining that will in turn reduce dependence on imported fuel, saving billions of dollars that can be reinvested into other areas of the economy.
The government’s move would also boost local refining capacity to strengthen Nigeria’s energy security by ensuring a more reliable and self-sufficient fuel supply.
