From Juliana Taiwo-Obalonye, Abuja
The Federal Executive Council (FEC) meeting, presided over by President Bola Tinubu, has approved the sale of crude oil to indigenous refineries including Dangote Refinery in naira.
The Executive Chairman of the Federal Inland Revenue Service (FIRS), Zacch Adedeji made the disclosure at the ending of the meeting.
He said President Bola Tinubu directed the Nigeria National Petroleum Corporation (NNPC) Limited, to ensure this is done with immediate effect.
Today, at the Federal Executive Council, there was a memo by Mr President, which is to promote the sale of crude oil within local refineries and Nigeria National Petroleum Corporation (NNPC), to deal in our local currency.
“The attitude of Mr President is thinking outside the box to solve Nigeria’s problem and actually to localised the solutions to Nigeria’s problem.
“He has approved through the Council that effective immediately, that NNPC get engaged with local refineries and we are starting that with Dangote Refinery. That the sales of crude oil to Dangote Refinery be denominated in Naria and also the sales of byproducts from Dangote Refinery to distributors also be conducted in naira.
“And what does it mean to our economy? One, the pressure on foreign exchange will be reduced.”
Adedeji said today Nigeria spends between 30% to 40% of foreign exchange on importation of PMS that that it consume. He said, “monthly, we spend roughly $660 million in these exercise and if you analyse that will give us $7 .92 billion annually.”
The FIRS boss said, “With this approval today through FEC led by Mr President, this has reduced by minimum of 90 percent. Because what we have today, the transaction will now be down 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 are, one which is major, is the reduction in foreign exchange pressure, utilise $660 million per month, totally $7.92 billion annually. With the new approval that we have, this will reduce to maximum of $50 million per month which is annnualised to be only $600 million. This is total reduction of 94% and saving us 7.32 billion.
“This will also reduce finance costs, which today stands at $79 million. When you consider opening letter of credit between those local refineries and what happens.
“And also, Council has approved the settling bank to be Afreximbank. It will be the lead arranger between NNPC and Dangote Refinery.
“So, this is a major innovation in solving Nigeria’s problem permanently. Not only will we have more employment but we will definitely be in charge of one of our main stay of our economy.
“So I congratulate the council members, Mr. President, and also congratulate the operator, the NNPC 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 scenes to make sure that what we witnessed today, happened.”