The federal government has officially announced the commencement of crude oil sale to Dangote Refinery, other local refineries in the local currency, naira on October 1, 2024.
This was disclosed by the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, in a statement on Saturday.
The sale of crude oil to the 650,000 bpd refinery was initially approved by the Federal Executive Council (FEC) in July, with transactions set to begin this month.
In a post on the official X account of the Ministry, the government confirmed that it had commenced sales of crude to local refineries in naira as of October 1.
"The Hon. Minister of Finance and Coordinating Minister of the Economy announced that, in line with the Federal Executive Council (FEC) directive, the sale of crude oil and refined petroleum products in Naira has officially commenced as of October 1st, 2024.
"Following a meeting of the Implementation Committee, chaired by the Hon. Minister of Finance and Coordinating Minister of the Economy on October 3rd, 2024, to conduct a post-commencement review of the Crude Oil and Refined Products Sales in Naira initiative, the commencement of this strategic initiative was affirmed by key stakeholders," the statement read.
Edun also affirmed that the stakeholder meeting was attended by the Hon. Minister of State, Petroleum (Oil), Heineken Lokpobiri, the Vice President of Dangote Group, Edwin Devakumar, NNPC boss, Mele Kyari, among others.
"The meeting included the Hon. Minister of State, Petroleum (Oil), the Special Adviser to the President on Revenue, the Special Adviser to the President on Energy, the Chief Executive of the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), the representative of the Chairman of Dangote Group, the Vice President of Dangote Group, and the management of the Nigerian National Petroleum Company (NNPC), led by the Group Chief Executive Officer (GCEO), Chief Financial Officer (CFO), and Executive Vice President (Downstream)," the statement added.
Backstory
Nairametrics previously reported that on July 29, the Federal Executive Council approved President Tinubu's proposal to halt the sale of crude oil by NNPC to local refineries in foreign currency.
The Council decided that the 450,000 barrels allocated for domestic use will now be sold in Naira to Nigerian refineries, with Dangote Refinery serving as the pilot project.
This measure is intended to stabilize both the pump price of refined fuel and the dollar-naira exchange rate.
A recent report indicates that Dangote Refinery requires 15 cargoes of crude oil annually, and the Nigerian National Petroleum Corporation (NNPC) will supply four of these cargoes.
The Minister of Finance, Wale Edun, later announced that the transaction would officially begin on October 1, 2024.
What you should know
The Federal Executive Council's decision to sell crude oil to Dangote Refinery and other local refineries in Naira, as proposed by President Tinubu, carries several important implications for Nigerians.
This policy aims to stabilize pump prices, potentially resulting in lower and more predictable fuel costs for consumers.
By conducting transactions in Naira rather than dollars, the pressure on foreign exchange reserves would ease, helping to stabilize the dollar-Naira exchange rate and control inflation.
Increasing local refining capacity will reduce dependence on imported fuel, saving billions of dollars that can be reinvested into other areas of the economy.
Additionally, boosting local refining capacity strengthens Nigeria's energy security by ensuring a more reliable and self-sufficient fuel supply.
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