President Bola Tinubu has directed the Nigerian National Petroleum Company Limited (NNPCL) to sell crude oil to local refineries, including the Dangote Refinery, in Naira rather than foreign currency. This directive, announced by the president’s special adviser on information and publicity, Bayo Onanuga, aims to stabilize the pump price of refined fuel and the dollar-Naira exchange rate.

In a statement posted on his official X handle, Onanuga explained that this policy was adopted by the Federal Executive Council (FEC) to ensure economic stability. “To ensure the stability of the pump price of refined fuel and the dollar-Naira exchange rate, the Federal Executive Council today adopted a proposal by President Tinubu to sell crude to Dangote Refinery and other upcoming refineries in Naira,” Onanuga stated.

Dangote Refinery currently requires 15 cargoes of crude annually, costing $13.5 billion, with NNPC committed to supplying four of these cargoes. The FEC has approved that the 450,000 barrels meant for domestic consumption be offered in Naira to Nigerian refineries, starting with the Dangote refinery as a pilot. The exchange rate will be fixed for the duration of this transaction.

To facilitate this trade, Afreximbank and other settlement banks in Nigeria will support transactions between Dangote and NNPC Limited, eliminating the need for international letters of credit and potentially saving the country billions of dollars spent on importing refined fuel.

This directive follows recent industry controversies. Farouk Ahmed, CEO of the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), had alleged that local refineries, including Dangote, produce inferior products compared to imports. Dangote refuted these claims by testing diesel from his refinery on July 20 during a visit from federal lawmakers.

The move by President Tinubu is seen as a strategic effort to bolster the local refining sector and maintain economic stability amidst fluctuating global oil prices.