Good News for Naira As FG Gives New Instruction on Crude Oil Sale to Dangote, Other Refineries
- The federal government has approved the sale of crude oil to Dangote and other refineries in naira
- The decision is expected to potentially boost the Nigerian currency as it will ease the pressure on companies to buy dollars
- Nigeria is determined to achieve self-sufficiency in crude oil refining, and the likes of Dangote and other modular refineries are at the forefront
Legit.ng journalist Dave Ibemere has over a decade of business journalism experience with in-depth knowledge of the Nigerian economy, stocks, and general market trends.
The federal government has announced that indigenous refineries can now buy crude oil in naira or dollars.
The government disclosed this through the Nigerian Upstream Petroleum Regulatory Commission(NUPRC) at a briefing in Abuja on Monday, April 16, 2024.
Source: Getty Images
According to NUPRC, entities like the Dangote refinery and other modular refineries across the country must now decide which currencies to use to pay for crude oil.
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Crude oil sales to be done in naira
Gbenga Komolafe, the chief executive of NUPRC, explained further that the naira transactions would relieve pressure on the country’s foreign exchange rate.
This is expected to ease pressure on the naira and help reduce the demand for the dollar.
Punch reports that Komolafe also revealed that it has unveiled a new domestic crude oil supply obligation template.
He said:
“The PIA intends to make the implementation (of crude oil obligation) very easy for the parties, both for the producers and refineries. So the answer simply is that the currency for the transaction would either be in naira or dollar. That is the simple answer.
“But we all know that if the transaction is carried out in naira, that itself will free the pressure on the exchange rate. That will help the exchange rate. So that is the intent and besides, the overall intent of the Petroleum Industry Act is to develop our midstream, which is a very laudable provision of the PIA.”
"In the currency of payment section of the new template, it was stated that the payment shall be in either United States dollar or naira or both. Where the payment is in both currencies, the payment split shall be as agreed in the SPA between the producer and the refiner.”
New refinery to come
Legit.ng reported that a Chinese cargo ship, laden with an Akwa Ibom refinery project consignment, had berthed in Calabar port in Cross River state.
The development was a significant milestone in constructing a state-of-the-art refinery in Akwa Ibom state.
The two refinery projects were expected in the Eket and Onna local government areas.
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Source: Legit.ng
