In a strategic move to stabilize fuel prices and support the local economy, President Bola Tinubu has announced that the Nigerian National Petroleum Corporation (NNPC) will sell crude oil to the Dangote Refinery in Naira. This decision, endorsed by the Federal Executive Council (FEC), aims to provide a significant boost to the refinery while also addressing the nation’s economic challenges.
The Dangote Refinery, which requires 15 shipments of crude oil annually—totaling $13.5 billion—will receive four of these cargoes from the NNPC. By transacting in Naira, the government hopes to alleviate the pressure on the country’s foreign exchange reserves and maintain a stable exchange rate between the dollar and the Naira.
The FEC’s decision to allocate 450,000 barrels of crude for local consumption, priced in Naira, marks a significant shift in Nigeria’s approach to its oil sector. This initiative, starting with the Dangote Refinery, will serve as a test case for future transactions with other new refineries in the country. The arrangement also involves the support of Afreximbank and other Nigerian settlement banks, streamlining the trade process and eliminating the need for international letters of credit.
This move is expected to result in substantial cost savings for Nigeria by reducing the billions of dollars spent annually on importing refined fuel. By promoting local refining capacity, the government seeks to create a more self-sufficient and resilient energy sector. The decision reflects a broader effort to harness Nigeria’s resources and economic potential, with the Dangote Refinery playing a crucial role in this transformation.
