The Federal Government has officially begun the sale of crude oil and refined petroleum products in Naira as part of a landmark agreement with Dangote Refinery.
This move is expected to stabilize fuel prices and ease the economic pressure caused by rising petrol costs in the country.
Wale Edun, the Minister of Finance and Coordinating Minister of the Economy, announced the launch of the Naira-for-crude sale on Saturday, October 5, 2024.
He said the initiative took effect on October 1, 2024, in line with a directive from the Federal Executive Council (FEC).
The Naira-for-crude deal marks a significant step in Nigeria’s efforts to shift away from foreign currency dependence in its oil sector.
Under the new arrangement, the Dangote Refinery will pay for crude oil in Naira, rather than in foreign currencies like the U.S. dollar.
The government hopes that this will bring some relief to Nigerians by potentially lowering the price of petrol, which has skyrocketed in recent months.
Petroleum marketers and crude refiners have suggested that the deal may lead to a reduction in fuel pump prices, which currently range between ₦950 and ₦1,100 per liter.
In a statement released on the official X (formerly Twitter) account of the Ministry of Finance, Minister Wale Edun confirmed the official commencement of the Naira-for-crude sale on October 1, 2024.
Edun emphasized that this move is part of a broader strategy to reform Nigeria’s petroleum sector and reduce the country’s reliance on foreign exchange for its oil transactions.
“The sale of crude oil and refined petroleum products in Naira has officially commenced as of October 1, 2024,” the statement read.
This announcement followed a meeting on October 3, 2024, where key stakeholders reviewed the progress of the initiative.
The meeting, chaired by Minister Wale Edun, included prominent figures in Nigeria’s oil and energy sector.
Among those present were the Minister of State for Petroleum (Oil), the Special Adviser to the President on Revenue, and the Special Adviser to the President on Energy.
Also in attendance were representatives from the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), the Dangote Group, and the Nigerian National Petroleum Company Limited (NNPCL).
The statement highlighted the commitment of these stakeholders to ensuring the success of the Naira-for-crude initiative.
They reviewed the initial implementation of the program and discussed ways to streamline the sale process for both crude oil and refined petroleum products in Naira.
The Naira-for-crude deal has been in the works for several months.
In July 2024, President Bola Ahmed Tinubu directed the Nigerian National Petroleum Company Limited (NNPCL) to sell crude oil in Naira to Dangote Refinery.
This directive was part of the president’s broader plan to stabilize fuel prices and curb inflation, which has caused hardship for many Nigerians.
By shifting to Naira-based transactions, the government hopes to ease pressure on the country’s foreign exchange reserves and reduce fuel import costs.
The Dangote Refinery, a private venture owned by Africa’s richest man, Aliko Dangote, is the largest single-train refinery in the world.
It is seen as a key player in Nigeria’s oil industry, with the potential to refine enough crude oil to meet local demand and significantly reduce Nigeria’s dependence on imported fuel.
One of the biggest questions surrounding the Naira-for-crude deal is whether it will lead to lower fuel prices in Nigeria.
Petroleum marketers and industry experts believe that the deal could result in a significant reduction in the cost of petrol.
Currently, the price of fuel in Nigeria ranges between ₦950 and ₦1,100 per liter, depending on location.
This steep increase in fuel prices followed the removal of the fuel subsidy by the Tinubu administration in May 2023.
The removal of the subsidy, while necessary to reduce government spending, caused fuel prices to surge, leading to higher transportation costs and inflation across the economy.
The Naira-for-crude deal, however, may help reverse this trend by allowing Dangote Refinery to source crude oil at a lower cost, which could, in turn, bring down the price of petrol at the pump.
