Nigeria to Begin Naira-Based Crude Oil Sales to Dangote Refinery from October
The Nigerian government has announced that it will commence the sale of crude oil in naira to the Dangote Refinery and other local refineries starting from October 1, 2024. This marks a significant shift in the country’s oil sales strategy, aimed at bolstering economic stability and reducing reliance on foreign currency for domestic transactions.
The Minister of Finance and Coordinating Minister of the Economy, Wale Edun, disclosed this development during a meeting with the Implementation Committee in Abuja on Monday. The meeting, convened to review the progress of key economic initiatives, included representatives from 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, all of whom have been tasked with ensuring the smooth implementation of this policy shift.
According to a post on the official X (formerly Twitter) page of the finance ministry, the meeting reviewed progress on transitioning to naira-based crude oil sales. The post read, “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.”
During the meeting, Dr. Zacch Adedeji, Executive Chairman of the Federal Inland Revenue Service, reported that the first delivery of Premium Motor Spirit (PMS) from the Dangote Refinery is expected next month, under existing agreements. Additionally, updates were provided on both the Port Harcourt and Dangote refineries, with significant production increases anticipated from November 2024.
The Minister stressed the importance of transparency in this transition and directed the Technical Sub-Committee to finalise the details and prepare a report for President Bola Tinubu, confirming that the directives are on track for implementation from September.
This decision follows the Federal Executive Council’s approval on July 29 of President Tinubu’s proposal to halt the sale of crude oil to local refineries in foreign currency. The Council endorsed the move to offer the 450,000 barrels of crude oil allocated for domestic consumption in naira, with the Dangote Refinery serving as a pilot project.
This strategic shift is intended to stabilise the pump price of refined fuel and mitigate fluctuations in the dollar-naira exchange rate. Currently, the Dangote Refinery is expected to require 15 cargoes of crude oil annually to meet its production needs.
In response to this policy, the finance minister inaugurated a technical sub-committee to develop the framework for these naira-based transactions, with Monday’s meeting marking the second discussion on the matter in the past week.
