Since assuming office, President Bola Ahmed Tinubu has faced relentless criticism and even sabotage from various quarters, yet he remains undeterred in his unwavering commitment to leave Nigeria better than he inherited it.
With an unshakeable resolve, he has continued to push forward with innovative policies and initiatives aimed at transforming the nation’s economy, energy sector, and overall well-being of its citizens.
In his latest move, President Tinubu has unveiled a groundbreaking policy to sell crude oil to local refineries in Naira, a bold step that showcases his understanding of the issues and the genuine intentions to see the problems solved with the best practicable solutions.
On Monday, July 29, President Tinubu introduced a groundbreaking policy to sell crude oil to Dangote Refinery and other local refineries in Naira, marking a significant departure from the traditional dollar-based transactions.
This bold move industry experts agree has the potential to transform Nigeria’s energy landscape, stabilize the economy, and save billions of dollars in foreign exchange.
The Rationale
Africa’s largest oil producer, has long been plagued by a reliance on imported refined fuel, despite having an abundance of crude oil reserves. This paradox has resulted in:
Volatility in Pump Prices:
The constant fluctuations in global oil prices have led to unpredictable pump prices, affecting consumers and businesses alike.
Dollar-Naira Exchange Rate Instability:
The demand for dollars to purchase crude oil has put pressure on the Naira, contributing to exchange rate instability.
Loss of Billions:
The country has lost billions of dollars to imported refined fuel, draining foreign exchange reserves and hindering economic growth.
The Solution
To address these challenges, President Tinubu’s administration has approved the sale of 450,000 barrels of crude oil meant for domestic consumption to Nigerian refineries, with Dangote Refinery serving as the pilot.
The key features of this policy include:
Naira-Based Transactions:
Crude oil sales will be conducted in Naira, eliminating the need for dollars and reducing pressure on the foreign exchange market.
Fixed Exchange Rate:
The exchange rate for this transaction will be fixed, ensuring stability and predictability for the duration of the agreement.
Local Refining:
By promoting local refining, Nigeria can reduce its reliance on imported fuel, saving billions of dollars in foreign exchange.
Afreximbank and Settlement Banks:
Afreximbank and other settlement banks in Nigeria will facilitate the trade between Dangote and NNPC Limited, streamlining the transaction process.
Game-Changing Impact
According to experts, this innovative policy has far-reaching implications for Nigeria’s economy and energy sector.
They contend that stability in pump prices can now be enhanced.
“The fixed exchange rate and local refining will lead to more stable pump prices, benefiting consumers and businesses.” Ayo Agboola an Energy Correspondent asserted.
Experts also pointed out that there will be more stability in the Dollar-Naira exchange rate with this new policy.
They explained that the reduced demand for dollars will contribute to a more stable exchange rate, boosting investor confidence.
Also experts contend Nigeria will be saving billions by promoting local refining and reducing imports which will in turn help stimulate economic growth.
“This policy has the potential to stimulate economic growth, create jobs, and increase government revenue.” Mr Agboola concluded.
