The Federal Government of Nigeria has announced that it will begin selling crude oil to the Dangote Refinery in naira, effective from October 1, 2024.
This was confirmed by the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, during a high-level meeting with the Implementation Committee in Abuja.
The meeting, which took place on Monday, was held to evaluate the progress of several key initiatives, including the transition to naira payments for crude oil.
According to an official statement released by the Ministry of Finance on its X (formerly Twitter) page, the shift to naira-based transactions is part of a broader strategy to strengthen the domestic currency and reduce Nigeria’s dependency on foreign exchange in its oil trade.
“The Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, today led the Implementation Committee meeting on the transition to crude oil sales in naira. The meeting reviewed progress on key initiatives, including the upcoming commencement of naira payments for crude oil sales to the Dangote Refinery starting October 1, 2024,” the statement read.
This policy marks a significant departure from the traditional practice of selling crude oil in U.S. dollars, a move expected to have far-reaching implications for the Nigerian economy.
By transacting in naira, the government aims to stabilize the currency, manage inflation, and improve the liquidity of the naira in the global market.
The Dangote Refinery, which is set to become one of the largest single-train refineries in the world, is expected to play a crucial role in Nigeria’s energy sector.
The refinery’s operations will significantly reduce the country’s dependence on imported petroleum products, thereby conserving foreign exchange and promoting local economic growth.
Key stakeholders involved in the implementation of this policy include the Nigerian Midstream and Downstream Petroleum Regulatory Authority, the Central Bank of Nigeria, the Nigerian Upstream Petroleum Regulatory Commission, and the African Export-Import Bank.
These bodies are tasked with ensuring a seamless transition to the new payment system and supporting the operational success of the Dangote Refinery.
Also, Zacch Adedeji, the Executive Chairman of the Federal Inland Revenue Service (FIRS), highlighted that the first delivery of Premium Motor Spirit (PMS) from the Dangote Refinery is expected as early as next month, in alignment with existing agreements.
This delivery will mark the beginning of a new era in Nigeria’s oil industry, where local content and currency play a more prominent role.
The government’s decision to sell crude oil in naira to the Dangote Refinery is seen as a strategic move to enhance the refinery’s integration into the national economy while also providing a buffer against external economic shocks.
