Nigeria’s President, Bola Ahmed Tinubu has approved a new directive to promote the trade of crude oil using the local currency.
The Federal Inland Revenue Service (FIRS) Chairman, Zaccheus Adedeji, disclosed this to State House correspondents on Monday after the Federal Executive Council meeting at the State House , Abuja
According to him, effective immediately, the Nigerian National Petroleum Corporation Limited (NNPC) will engage with local refineries in transactions dominated in Naira.
He said this move is also extended to the sale of crude oil to Dangote, with the subsequent sale of Dangote’s products as well as others to be conducted in Naira.
He said the decision aims to mitigate the over reliance on foreign exchange for crude oil imports, which he said currently accounts for 30 to 40 percent of Nigeria’s FOREX expenditure.
The FIRS Chairman further explained that by denominating transactions in naira, the federal government expects to significantly reduce this FOREX burden, estimating annual savings of around $7.3 billion.
Adedeji emphasized that this shift will stabilize crude oil prices domestically by minimizing the impact of FOREX fluctuations.
He said the new policy is anticipated to ease the pressure on Nigeria’s foreign exchange reserves, reducing monthly forex expenditure from $50 million to approximately $600 million.
As part of the implementation, Afreximbank has been selected as the pilot settlement bank to facilitate these transactions.
“There was a memo prepared by the President to promote the trade of crude oil within local refineries and the NNPCL to deal in Nigerian local currency.
“The attitude of the President is to solve the Nigeria problem of over reliance on foreign exchange and localise the solution to the Nigerian problem.
“Approved effective with immediately is that NNPCL gets engaged with local refineries and we are starting that with Dangote that is the sales of crude oil to Dangote and that takes effect with the denominator in Naira and sales of crude oil should also be carried out in naira to others.“
Adedeji explained further that this means the pressure on foreign exchange in Nigeria will be reduced.
“Today Nigeria spend roughly 30 to 4opercent on importation of crude oil, this approval will make economy predictability a more reality, it’s an innovation in solving Nigeria’s problem. The benefit also includes reduction in foreign exchange pressure in Nigeria,” he added.
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