The Nigerian government has officially begun selling crude oil and refined petroleum products in Naira, marking a significant shift in the country’s oil market. This new policy, which took effect on October 1, 2024, was announced by the Federal Ministry of Finance on Saturday.
In a statement posted on its X (formerly Twitter) handle, the Ministry said, “The Honorable 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.”
This development comes after a meeting of the implementation committee on October 3, chaired by the Minister of Finance, Wale Edun, to review the Crude Oil and Refined Products Sales in Naira initiative. The meeting affirmed that the initiative had officially started, and key stakeholders, including the Minister of State for Petroleum (Oil) and other government officials, were present.
The statement explained that several top officials participated in the meeting. Among them were the Special Adviser to the President on Revenue, the Special Adviser to the President on Energy, and the Chief Executive of the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA). Representatives from the Dangote Group, including its Vice President, and the management team from the Nigerian National Petroleum Company (NNPC), led by the Group Chief Executive Officer (GCEO), were also in attendance.
Government Aims to Strengthen Local Economy
The decision to conduct crude oil sales in Naira is a part of the government’s broader strategy to strengthen the domestic economy by reducing reliance on foreign currencies, particularly the U.S. dollar. By mandating that oil transactions be carried out in the local currency, the government aims to boost Naira liquidity and stabilize the currency.
“We are confident that this initiative will benefit the economy and help ensure a more stable exchange rate,” said Wale Edun. The move is expected to ease pressure on foreign exchange markets and improve liquidity for local businesses involved in petroleum trading.
Ongoing Dispute with Dangote Group
The decision to sell crude oil in Naira follows a series of disputes between Nigeria’s petroleum regulators and the Dangote Group, which controls one of Africa’s largest refineries. Earlier this year, Dangote accused international oil companies of inflating crude oil prices and withholding supplies, affecting the refinery’s operations.
In addition, Nigerian regulators, including the Nigerian Midstream and Downstream Petroleum Regulatory Authority, raised concerns about the sulphur content in diesel produced at the Dangote Refinery. They claimed the refinery’s diesel contained levels of sulphur that exceeded regulatory limits, which the company denied.
During a site visit in response to these claims, Dangote presented evidence that its diesel had significantly lower sulphur content than imported alternatives. The laboratory tests were conducted in front of lawmakers visiting the refinery, supporting Dangote’s position in the dispute.
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Federal Executive Council Directives
In July, the Federal Executive Council (FEC), led by President Bola Tinubu, stepped in to resolve the tensions. The FEC instructed the Nigerian National Petroleum Company Limited (NNPC Ltd) to engage with the Dangote Refinery and other local refineries to settle disputes over crude oil sales.
The Council also issued a directive that all crude oil sales to Nigerian refineries, including Dangote’s, should be conducted in Naira. This measure ensures that refineries sell their refined petroleum products in the local currency to the Nigerian domestic market.
Stakeholder Reactions
This policy shift has been welcomed by some stakeholders as a positive step toward stabilizing the economy. However, others have expressed concern over how it might affect international trade and the availability of foreign exchange.
“We believe this is a step in the right direction for Nigeria’s oil industry, but we need to watch how it plays out, especially in the international market,” noted an industry expert.
The government remains optimistic that this bold move will boost the economy, enhance the value of the Naira, and streamline the country’s petroleum sector. Time will tell how this change impacts both local and international stakeholders in the oil industry.