By Dare Balogun, 30th July, 2024
1. President Tinubu’s administration has announced this new initiative.
2. The goal is to stabilize fuel prices and the dollar-Naira exchange rate.
Before now:
3. Dangote Refinery needs fifteen (15) cargoes of crude oil worth $13.5 billion annually.
4. Currently, crude oil is sold in US dollars, which fluctuates and affect fuel prices.
As it is:
5. The Federal Executive Council has approved a proposal to sell crude oil to Dangote Refinery and other upcoming refineries in Naira (Nigerian currency).
6. This will reduce reliance on foreign currency and mitigate exchange rate fluctuations.
On the part of NNPCL:
7. NNPCL (Nigerian National Petroleum Corporation Limited) will supply four (4) cargoes of crude oil to Dangote Refinery.
8. The remaining 450,000 barrels designated for domestic consumption will be offered to Nigerian refineries in Naira.
9. The exchange rate for this transaction will be fixed to ensure stability.
How this will be facilitate:
10. Afreximbank and other settlement banks in Nigeria will facilitate the trade between Dangote and NNPC Limited.
11. This will eliminate the need for international letters of credit.
Benefits:
12. This initiative will save the country billions of dollars previously spent on importing refined fuel.
13. It will bolster the economy and reduce reliance on foreign currency.
14. By reducing reliance on foreign currency and mitigating exchange rate fluctuations, fuel prices will remain stable, benefiting consumers.
15. Stable fuel prices will help reduce inflation, as fuel costs are a significant component of production and transportation expenses.
16. Saving billions of dollars on importing refined fuel will boost economic activity, create jobs, and stimulate growth.
17. Reducing foreign currency outflows for fuel imports will help improve Nigeria’s foreign exchange reserves.
18. Increasing domestic refining capacity will reduce reliance on fuel imports, enhancing energy security and reducing supply disruptions.
19. The growth of the refining sector will lead to job creation in the industry, both directly and indirectly.
20. By using Naira for domestic crude oil sales, the pressure on foreign exchange reserves will be reduced, making more forex available for other critical sectors.
21. The government will earn more revenue from the sale of crude oil in Naira, which will be used for development projects and social programs.
22. The growth of the refining sector will contribute to a more diversified economy, reducing dependence on crude oil exports.
23. The overall economic benefits will lead to an improved standard of living for Nigerians, as more resources become available for development and social programs.
This is a laudable feat by the Tinubu’s led administration. I have keen hope that this administration will work to stabilize the economy.
