Naira for crude policy remains in place

The Nigerian government on Monday said the policy framework enabling the sale of crude oil in naira for domestic refining remains in force.

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The Chairman of the Federal Inland Revenue Service (FIRS), Zacch Adedeji, who also chairs the technical subcommittee on the presidential initiative on naira for crude sales, made this known in reaction to reports alleging unilateral termination of the crude oil sale agreement between NNPC and Dangote Refinery.

In a statement on Monday, the government said the reports do not reflect the realities of the ongoing work under the Federal Executive Council Initiative on the domestic sale of crude oil and refined products in Naira.

“Our attention has been drawn to reports suggesting that the naira-based crude oil supply arrangement with local refineries has been discontinued, forcing them to rely solely on international crude purchases. These reports do not reflect the realities of the ongoing work under the Federal Executive Council Initiative on Domestic Sales of Crude Oil and Refined Products in Naira.

“As the committee driving the implementation of this initiative, we wish to provide an update on the Federal Executive Council initiative and confirm as follows: the policy framework enabling the sale of crude oil in naira for domestic refining remains in force,” Mr Adedeji said.

He explained that the initiative was designed to ensure supply stability and optimise the utilisation of local refining capacity.

He said there has been no decision at the policy level to discontinue this approach nor is it being considered.

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“After implementing the policy for some months, evidence abounds that it is the right way to go and it will continue to help the economy. The engagement process for crude oil supply to domestic refineries therefore remains in place by structured agreements, balancing factors such as availability, demand, and market conditions.

“There is no exclusion of local refineries from access to domestic crude. The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) is actively ensuring compliance with the Domestic Crude Oil Obligations provisions of the Petroleum Industry Act,” he said.

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He added that the framework for domestic crude transactions is designed to promote a competitive and efficient pricing environment.

“We remain committed to ensuring the efficient execution of this initiative in line with its core objectives – enhancing local refining, reducing foreign exchange exposure, and stabilising the domestic fuel supply,” he said.

In July last year, the Federal Executive Council (FEC) directed NNPC Ltd to engage Dangote Refinery and other local refineries to resolve the dispute over the sale of crude oil to them.

The FEC, presided over by President Bola Tinubu, also directed that crude oil sales to the refineries be made in naira and that the refineries, located in Nigeria, sell their refined products to the Nigerian market in naira.

Last October, the Nigerian government said it had officially commenced the sale of crude oil and refined petroleum products in Naira.