The Federal Government of Nigeria has announced that it will commence the sale of crude oil to the Dangote Refinery in naira from October 1, 2024. This decision was confirmed by the Ministry of Finance following a meeting with the technical implementation committee, chaired by Wale Edun, the Minister of Finance.
In a statement released on Monday, the ministry highlighted that the meeting focused on the transition to selling crude oil to local refineries in the Nigerian currency, a directive initially given by President Bola Tinubu. On August 15, the government had inaugurated a technical subcommittee to facilitate this transition smoothly.
At the latest meeting, the committee assessed progress on several key initiatives, including the scheduled start of naira payments for crude oil sales to the Dangote Refinery. The sale marks a significant shift in the country’s oil trade practices, traditionally conducted in U.S. dollars.
The ministry’s statement also outlined the roles of various stakeholders, including the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), Central Bank of Nigeria (CBN), Nigerian Upstream Petroleum Regulatory Commission (NUPRC), and the African Export-Import Bank (Afreximbank), all of whom are tasked with ensuring the seamless execution of this policy.
Significant production increases are anticipated at the Port Harcourt and Dangote refineries beginning in November 2024, according to updates provided during the meeting. Zacch Adedeji, the Executive Chairman of the Federal Inland Revenue Service (FIRS) and head of the technical subcommittee, mentioned that the first delivery of premium motor spirit (PMS) from the Dangote Refinery is expected next month under the existing agreements.
Earlier in August, the Dangote Refinery had announced its intention to start supplying petrol by the end of the month.
Minister Wale Edun, emphasizing the need for transparency in the process, directed the subcommittee to finalize the details of the naira-for-crude arrangement and to prepare a comprehensive report for President Tinubu. This report will confirm that the implementation is on track to begin in September.
The move follows a July 29 decision by the Federal Executive Council (FEC), which approved a proposal by President Tinubu directing the Nigerian National Petroleum Company (NNPC) Limited to sell crude oil to the Dangote Refinery and other local refineries in naira, marking a significant step towards the localization of Nigeria’s oil trade.
This initiative is expected to have far-reaching implications for the Nigerian economy, potentially reducing the pressure on foreign exchange reserves and fostering a stronger naira.
