President Bola Ahmed Tinubu has taken a significant step by directing the Nigerian National Petroleum Company Limited (NNPCL) to engage in the sale of crude oil exclusively to Dangote Refinery, and this transaction is to be conducted in Naira, the local currency.
In a statement shared on his official X handle on Monday, Bayo Onanuga, the Special Adviser to the President on Information and Publicity, announced this important development. He provided details about the initiative and its implications for the country’s economy and refineries.
Onanuga explained that the decision aims to ensure both the stability of the pump price of refined fuel available to consumers and the equilibrium of the Dollar-Naira exchange rate. The Federal Executive Council convened today and unanimously adopted a proposal put forth by President Tinubu that allows for the sale of crude oil directly to Dangote Refinery, along with other evolving refineries in Nigeria, using the Naira as the medium of exchange.
Furthermore, he elaborated on the pressing needs of the Dangote Refinery, noting that it currently requires a substantial 15 cargoes of crude oil each year, amounting to an impressive cost of $13.5 billion annually. As part of this agreement, NNPC has committed to providing four of these required cargoes.
The Federal Executive Council also approved that a total of 450,000 barrels, which are specifically allocated for domestic consumption, will be sold in Naira to Nigerian refineries. The Dangote Refinery will serve as the pilot in this transformative initiative. Moreover, the exchange rate for this transaction will be fixed for the entire duration, providing further stability to the process.
To facilitate this trade effectively, Afreximbank and various settlement banks operating within Nigeria will play a crucial role in supporting the transaction between Dangote and NNPC Limited. This groundbreaking initiative is poised to revolutionize the oil trade in the country by eliminating the necessity for international letters of credit. In doing so, it is expected to save Nigeria billions of dollars that are typically spent on importing refined fuel products.
