President Bola Ahmed Tinubu has approved a new directive to promote crude oil trade using the local currency.
He directed that the Dangote refinery and other companies should be sold crude oil in Naira.
The Federal Inland Revenue Service (FIRS) chairman, Zacchaeus Adedeji, disclosed this to State House correspondents yesterday after the federal executive council meeting at the Presidential Villa.
According to him, the Nigerian National Petroleum Corporation (NNPC) will immediately engage with local refineries in transactions dominated by naira.
Adedeji, the special adviser to the president on revenue, said this move is also extended to the sale of crude oil to Dangote, with the subsequent sale of Dangote’s products to others also to be conducted in naira.
He said the decision aims to mitigate the heavy reliance on foreign exchange for crude oil imports, accounting for roughly 30 to 40 percent of Nigeria’s forex expenditure.
He said, “Today, at the Federal Executive Council, there was a memo by Mr President, which is to promote the sale of crude oil within local refineries and Nigeria National Petroleum Corporation (NNPC), to deal in our local currency.
“Mr. President’s attitude is to think outside the box to solve Nigeria’s problems and actually localise the solutions to Nigeria’s problems.
“He has approved through the Council that NNPC engage with local refineries effective immediately, and we are starting that with Dangote Refinery; that crude oil sales to Dangote Refinery be denominated in Naria and that byproducts from Dangote Refinery sales to distributors be conducted in Naira. And what does it mean to our economy? One, the pressure on foreign exchange will be reduced.”
Adedeji said that, at the moment, Nigeria spends between 30 percent and 40 percent of its foreign exchange on importing PMS that it consumes.
He said, “Monthly, we spend roughly $660 million on this exercise, and if you analyse that, that will give us $7 .92 billion annually.”
The FIRS boss said, “With this approval today through the FEC led by Mr President, this has been reduced by a minimum of 90 percent, because what we have today, the transaction will now be done in our local currency; not only to Dangote Refinery but to all local refineries for all our local consumption, and this will stabilise the pump price.
“With the new approval that we have, this will reduce to a maximum of $50 million per month which is annualised to be only $600 million. This is a total reduction of 94 percent and saving us $7.32 billion.”
He revealed that as part of the implementation, Afreximbank has been selected as the pilot settlement bank to facilitate these transactions.
“So, this is a major innovation in solving Nigeria’s problem permanently. Not only will we have more employment but we will be in charge of one of the mainstays of our economy.”
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