Tinubu Directs NNPC to Sell Crude Oil to Dangote in Naira, Issues Additional Orders

Bola Tinubu, has directed the Nigerian National Petroleum Company Limited (NNPC) to begin trading its crude oil in the local currency naira with Dangote Refinery and other new refineries. The decision, which the Federal Executive Council (FEC) has given tacit approval to is ostensibly aimed at stabilising fuel price and making good of dollar-naira exchange rate fluctuation.

The new policy likely to be piloted with a directive on the Dangote Refinery The FEC has approved that 450,000 barrels per day originally meant for domestic consumption be sold in Naira to local refineries. Afreximbank will conduct the transactions facilitating this strategic move, helping to circumvent any requirement for international letters of credit as well as avoiding dollar costs.

This was confirmed by President Tinubu’s Special Adviser on Information, Strategy Mr Bayo Onanuga in a tweet he made this morning of Monday 29 July. The decision according to Onanuga in his tweet is that the exchange rate for this transaction will be constant througout itsty and smooth, not subjecting refineries wanting to pick crude from there ancillary services documents arena just as petrol gas that here naira value believes uncertainties drafts.

It would be recalled that the Central Bank of Nigeria (CBN) had issues between Dangote Refinery and Nigerian National Petroleum Cooperation (NNPC) over payment for crude oil in local currency recently. The Dangote Refinery was said to have demanded its payments in Naira whereas NNPC insisted on dollar denomination. The deadlock also jeopardized production at Dangote Refinery, which issued a notice to workers that it would cease operation if no agreement was reached.

The new policy is designed to improve the oil sector efficiency and boost domestic refining capacities by compelling crude sales in Naira [Image: BBC] This is viewed as a landmark step that will help the nation eventually to become self-reliant in refining of petroleum products thereby fulfilling the domestic fuel demand and also ensuring reduction on import dependence.

In the same vein, those directives of President Tinubu form part of broader initiatives aimed at reforming the oil and gas sector to establish a very solid economy against external shocks leading to sustainable growth through strategic national policies.