Tinubu Orders Naira Crude Sale, Marketers Project Price Crash

President Bola Tinubu has approved the sale of crude oil to the Dangote Petroleum Refinery in naira, a move that is expected to lower the prices of domestically refined petroleum products. Oil marketers, refiners, and experts have lauded this decision, which they believe will boost the output of domestic refineries, bolster Nigeria’s foreign exchange reserves, and strengthen the naira. Operators in the downstream oil sector praised the initiative, emphasizing the importance of local refineries not having to struggle to obtain U.S. dollars to purchase a commodity produced within the country. The approval was announced on Monday, with Tinubu directing the Nigerian National Petroleum Company Limited (NNPC) to sell crude to the Dangote refinery and other upcoming refineries in naira. Bayo Onanuga, Special Adviser to the President on Information and Publicity, disclosed this via his official X handle. The Federal Executive Council adopted this measure to stabilize the pump price of refined fuel and the dollar-naira exchange rate. The 650,000 barrels per day Dangote refinery has faced challenges securing crude oil supplies from International Oil Companies (IOCs) and had resorted to massive crude imports. The NNPC has committed to supplying four cargoes of crude, with the new directive allowing the sale of 450,000 barrels meant for domestic consumption in naira, using the Dangote refinery as a pilot.

This policy shift is also aimed at reducing Nigeria's heavy reliance on foreign exchange for crude oil imports, which account for 30 to 40 percent of the country's forex expenditure. Zacch Adedeji, the President’s Special Adviser on Revenue and Chairman of the Federal Inland Revenue Service, stated that this move could save Nigeria approximately $7.3 billion annually and significantly reduce monthly forex expenditure on petroleum products from around $660 million to $50 million.

Adedeji highlighted the benefits of this new policy, including easing economic predictability by reducing forex fluctuations and lowering finance costs associated with opening letters of credit. He also mentioned that Afrieximbank would act as the lead arranger between NNPC and the Dangote refinery, with the Central Bank of Nigeria, the Nigerian National Petroleum Company Limited, and the Federal Ministry of Finance among other critical agencies involved in the initiative.