President Bola Tinubu has signed a new directive to encourage the trade of crude oil in the local currency.
Zacchaeus Adedeji, Chairman of the Federal Inland Revenue Service (FIRS), announced this to State House media on Monday following the Federal Executive Council (FEC) meeting at the Presidential Villa in Abuja.
Effective immediately, the Nigerian National Petroleum Company (NNPC) Limited will conduct transactions with local refineries primarily in Naira.
This step was extended to include the sale of crude oil to Dangote Refinery, as well as the selling of Dangote products to others in Naira.
The decision aimed to reduce Nigeria’s significant reliance on foreign cash for crude oil imports, which now account for 30 to 40% of its forex expenditure.
The FIRS chief went on to say that by denominating transactions in Naira, the federal government hoped to drastically lower its forex burden, with an estimated yearly savings of $7.3 billion.
The change will keep crude oil prices stable locally by reducing the influence of FX swings.
The new strategy is expected to relieve strain on Nigeria’s foreign exchange reserves, lowering monthly FX spending from $50 million to around $600 million.
As part of the implementation, Afreximbank has been designated as the pilot settlement bank to facilitate transactions.
