Boosting Domestic Oil Refining

Tinubu’s Naira Crude Sale to Spur Domestic Refining and Strengthen Naira

President Bola Tinubu’s decision to sell crude oil to the Dangote Petroleum Refinery in naira is expected to lead to a significant reduction in the prices of domestically refined petroleum products. This move has been lauded by oil marketers, refiners, and experts, who believe it will enhance the output of domestic refineries, bolster the country’s foreign exchange reserves, and strengthen the naira.

The downstream oil sector has welcomed the initiative, highlighting its potential to stabilize pump prices and the dollar-naira exchange rate. This new directive, announced by the President’s Special Adviser on Information and Publicity, Bayo Onanuga, via his official X handle, mandates the Nigerian National Petroleum Company Limited to sell crude to the Dangote refinery and other upcoming refineries in naira.

This policy is seen as a game-changer that will eliminate the need for international letters of credit and save the country billions in import costs. By denominating crude oil transactions in naira, the government anticipates saving approximately $7.3 billion annually, significantly reducing monthly forex expenditure on petroleum products from $660 million to $50 million.

Special Adviser on Revenue Zacch Adedeji emphasized that this shift will mitigate Nigeria’s reliance on foreign exchange for crude oil imports, easing economic predictability and reducing forex fluctuations. The Federal Executive Council’s approval of this initiative is expected to bring a price advantage to local consumers and stabilize fuel prices.

Oil marketers and operators of modular refineries have praised the initiative, seeing it as a pivotal development that will lower the cost of petrol and boost the naira’s value. They believe this move will strengthen Nigeria’s oil sector, enhance local refineries’ operations, and support the country’s economic growth.