President Bola Tinubu has approved the sale of crude oil to the Dangote Petroleum Refinery in naira, a move expected to significantly reduce the prices of domestically refined petroleum products, according to oil marketers, refiners, and experts.
Downstream oil sector operators praised the President’s decision, highlighting its potential to increase domestic refinery output, boost foreign exchange reserves, and strengthen the naira. They also appreciated the media for keeping the issue prominent, arguing that Nigerian refineries should not need US dollars to buy domestically produced crude.
On Monday, Tinubu instructed the Nigerian National Petroleum Company Limited to sell crude oil in naira to the Dangote refinery and other upcoming refineries. This decision was shared by Bayo Onanuga, the President’s Special Adviser on Information and Publicity, via his official X handle.
Onanuga explained that the Federal Executive Council adopted this policy to stabilize fuel prices and the dollar-naira exchange rate. The Dangote refinery, which has faced crude supply issues with International Oil Companies (IOCs) and midstream/downstream regulators, requires about 15 cargoes of crude oil annually at a cost of $13.5 billion. NNPC has pledged to supply four cargoes, and the new order mandates selling crude to domestic refineries in naira.
The Federal Executive Council approved offering the 450,000 barrels intended for domestic consumption to Nigerian refineries in naira, with Dangote refinery as a pilot. This plan aims to eliminate the need for international letters of credit, saving the country billions on imported refined fuel.
Zacch Adedeji, the President’s Special Adviser on Revenue and Chairman of the Federal Inland Revenue Service, stated that this move would reduce Nigeria’s reliance on foreign exchange for crude oil imports, saving an estimated $7.3 billion annually and lowering monthly forex expenditure on petroleum products from $660 million to $50 million.
Adedeji emphasized that denominating crude transactions in naira would bring economic predictability by reducing forex fluctuations, and noted the benefits of the new regime, including decreased foreign exchange pressure and finance costs. The Federal Executive Council has appointed Afrieximbank as the lead arranger for the transaction between NNPC and Dangote refinery, with support from the Central Bank of Nigeria, the Federal Ministry of Finance, and other agencies.