Nigeria To Save $7.2 Billion Annually As NNPC Starts Selling Crude To Local Refineries In Naira

Nigeria To Save $7.2 Billion Annually As NNPC Starts Selling Crude To Local Refineries In Naira

Naija News reports that on Monday, President Tinubu directed the NNPC to begin immediate negotiations with local refineries, including the Dangote Refinery, to conduct transactions in Naira…….. CONTINUE READING

This announcement followed a Federal Executive Council (FEC) meeting chaired by President Tinubu, as detailed by Zacch Adedeji, who spoke to journalists at the State House.

The goal of this directive is to reduce Nigeria’s reliance on foreign exchange for crude oil imports, which currently consume about 30 to 40 percent of the country’s forex expenditure. The initiative also includes the sale of Dangote’s refined products in Naira.

Adedeji, who also leads the Federal Inland Revenue Service (FIRS), indicated that transacting in Naira is expected to ease the government’s forex burden and potentially save approximately $7.3 billion annually. This policy is anticipated to stabilize domestic crude oil prices by mitigating the impact of forex fluctuations.

The strategy aims to cut monthly forex spending on petroleum products from $660 million to $50 million, thereby reducing pressure on Nigeria’s foreign exchange reserves. AFREXIM Bank has been designated as the pilot settlement bank for these transactions.

“During today’s Federal Executive Council meeting, President Tinubu emphasized promoting crude oil sales to local refineries and using our local currency for transactions with the NNPC,” Adedeji explained.

He lauded President Tinubu’s innovative approach to tackling Nigeria’s economic issues through homegrown solutions.

Adedeji highlighted that Nigeria currently expends about 30-40% of its forex on PMS imports, amounting to roughly $660 million per month or $7.92 billion annually. The new policy is expected to reduce these costs by 90%, lowering monthly expenditure to $50 million and saving the nation about $7.32 billion annually.

Additionally, finance costs related to opening letters of credit, currently $79 million, will decrease. AFREXIM Bank will lead the arrangement between NNPC and Dangote Refinery for this initiative.

He commended AFREXIM Bank President, Prof. Benedict Oramah, for his role in facilitating this initiative, along with collaboration from the Central Bank of Nigeria, the NNPC, and the Federal Ministry of Finance.

The Presidential Adviser remarked, “The FEC’s approval today means transactions will now occur in our local currency, benefiting all local refineries and stabilizing pump prices. This will also enhance economic predictability by reducing reliance on forex fluctuations.

“To be specific, this approval will cut foreign exchange spending from $660 million monthly to $50 million, saving us $7.32 billion annually. Finance costs will also drop from $79 million. AFREXIM Bank will serve as the lead arranger for these transactions.

“This significant innovation will not only create more jobs but also put us in control of a key economic sector. I congratulate the Council members, President Tinubu, and the operators including NNPC, Dangote Refinery, and AFREXIM Bank, particularly Prof. Benedict Oramah, for their efforts in making this happen.

“The directive also includes AFREXIM leading the advisory work and structuring this initiative, in collaboration with the Central Bank of Nigeria, NNPC, the Federal Ministry of Finance, and other key agencies,” he added.