The Federal Government of Nigeria and Dangote Refinery have decided to conduct crude oil transactions in the local currency, Naira.
This strategic move is set to transform the dynamics of Nigeria's oil industry by reinforcing the use of local currency in transactions.
The Dangote Refinery, recognized as Africa's largest oil facility, is poised to receive an impressive 24 million barrels of crude oil over the months of October and November 2024.
The agreement stipulates that the Nigerian National Petroleum Corporation (NNPC) Limited will supply approximately 385,000 barrels per day starting from October 1, 2024.
This supply chain is crucial for the refinery, which has the capacity to process up to 400,000 barrels daily. In return, the Dangote Refinery will provide Premium Motor Spirit (PMS) and diesel of equivalent value to the domestic market, with all transactions conducted in Naira.
This arrangement marks a shift towards utilizing the local currency in major economic activities, potentially stabilizing and strengthening the Naira.
The deal also shows a pivotal moment for Nigeria's import-export balance, as it aims to reduce dependency on foreign currencies for essential transactions.
By settling all regulatory costs in Naira, the agreement further emphasizes the government's commitment to bolstering the national currency within the oil sector.
Diesel will be available for sale to any interested off-taker, while PMS will be sold exclusively to NNPC, which will then distribute it to various marketers.
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