The Federal Executive Council (FEC) has approved the selling of crude oil to private refineries, including Dangote Refinery, in naira instead of in dollars.
The Special Adviser (SA) to the President on Revenue and Executive Chairman of the Federal Inland Revenue Service (FIRS), Zacch Adedeji, made the disclosure at the end of the FEC meeting at the Presidential Villa, Abuja.
He told State House correspondents that President Bola Tinubu directed the Nigeria National Petroleum Corporation Limited (NNPCL) to ensure it was done with immediate effect.
He said, "Today at the FEC, there was a memo by Mr President, which is to promote the sale of crude oil within local refineries and NNPCL, to deal in our local currency.
"The attitude of Mr President is thinking outside the box to solve Nigeria's problem and actually to localise the solutions to Nigeria's problem.
"He has approved through the council that, effective immediately, that NNPC gets engaged with local refineries, and we are starting that with Dangote Refinery. That the sales of crude oil to Dangote Refinery be denominated in naira, and also the sales of by-products from Dangote Refinery to distributors and marketers also be conducted in naira.
"And what does it mean to our economy? One, the pressure on foreign exchange will be reduced."
Adedeji further said that today Nigeria spent between 30 per cent and 40 per cent of foreign exchange on importation of PMS that it consumed, adding that, "Monthly, we spend roughly $660m in this exercise, and if you analyse, that will give us $7.92bn annually.
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"With this approval today through FEC led by Mr President, this has reduced by minimum of 90 per cent, 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 actually stabilise the pump price.
"This will also make economic stability a reality because we will no longer rely on the fluctuation in forex. Once again, this is an innovation of solving our problem as a country today.
"Just to be specific in terms of benefits, one which is major, is the reduction in foreign exchange pressure. We utilise $660m per month, totalling $7.92bn annually. With the new approval that we have, this will reduce to a maximum of $50m per month, which is annualised to be only $600m. This is a total reduction of 94 per cent and saving us $7.32bn. This will also reduce finance costs, which today stand at $79m. When you consider the opening letter of credit between those local refineries and what happens.
"And also, the council has approved the settling bank to be Afreximbank. It will be the lead arranger between NNPCL and Dangote Refinery.
"So, this is a major innovation in solving Nigeria's problem permanently. Not only will we have more employment, we will definitely be in charge of one of the stays of our economy.
"So, I congratulate the council members, Mr President, and also congratulate the operators, NNPCL and Dangote Refinery, and also the lead arranger, Afreximbank, because kudos should go to the President of the African Export-Import Bank (Afreximbank), Prof Benedict Oramah, for these initiatives, because these are people that work behind the scene to make sure that what we witnessed today happened."
