Olusegun Omasan 
The Federal Government has announced that sales of crude oil to the Dangote Refinery will begin in naira from October 1, 2024. The Minister of Finance and Coordinating Minister of the Economy, Wale Edun, disclosed this during a meeting with the Implementation Committee in Abuja on Monday.
The Ministry of Finance confirmed the development through a post on its official X (formerly Twitter) page, stating that the meeting focused on assessing the progress of key economic initiatives.
At the meeting, the government outlined the crucial roles of various 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. These entities are tasked with ensuring a seamless 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.
Additionally, Zacch Adedeji, Executive Chairman of the Federal Inland Revenue Service and Chairman of the Technical Sub-Committee, reported that the first delivery of Premium Motor Spirit (PMS) from the Dangote Refinery is expected next month, in line with existing agreements.
“The first PMS delivery from Dangote is expected next month under existing agreements,” Adedeji stated.
Background
This announcement follows the Federal Executive Council’s approval of President Tinubu’s proposal on July 29, 2024, to cease the sale of crude oil to local refineries in foreign currency. The Council decided that the 450,000 barrels of crude oil designated for domestic use would now be sold in naira to Nigerian refineries, beginning with the Dangote Refinery as a pilot.
This move is aimed at stabilizing both the pump price of refined fuel and the dollar-naira exchange rate.
A recent report indicates that the Dangote Refinery requires 15 cargoes of crude oil annually, with the Nigerian National Petroleum Corporation (NNPC) committing to supply four of these cargoes.
Implications for Nigerians
The Federal Executive Council’s decision to sell crude oil to the Dangote Refinery and other local refineries in naira has several significant implications:
- Stabilized Pump Prices: The shift aims to stabilize fuel prices, potentially resulting in lower and more predictable costs for consumers.
- Foreign Exchange Relief: Conducting transactions in naira could reduce pressure on foreign exchange reserves, contributing to the stabilization of the dollar-naira exchange rate and helping to control inflation.
- Enhanced Energy Security: Increasing local refining capacity will reduce reliance on imported fuel, saving billions of dollars and enhancing Nigeria’s energy security by ensuring a more reliable and self-sufficient fuel supply.
