By Kachi Ekile
The Independent Petroleum Producers Group (IPPG) has stated that selling Nigeria’s crude oil in naira will only worsen the nation’s currency volatility and foreign exchange receipts.
Speaking in a statement on Monday, IPPG Chairman Abdulrazak Isa expressed the group’s concern via a letter to Gbenga Komolafe, chief executive officer (CEO) of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC).
The warning comes following President Bola Tinubu’s directive to the Nigerian National Petroleum Company (NNPC) Limited to sell crude oil to the Dangote Petroleum Refinery and other refineries in naira. The sale is expected to begin on October 1, 2024.
While broaching the subject, Isa pointed out that the development is not in accordance with the law.
According to him, a significant source of the government’s royalty and taxation earnings such as petroleum profit tax (PPT), company income tax (CIT), and hydrocarbon tax (HT), which are denominated in dollars, would be affected, and could further disrupt the fiscal regime.
“We are (also) aware of suggestions and proposal to sell crude in Naira, this is inconsistent with the law and will further put a materially significant strain on the efforts of the Government to manage the Naira as it will reduce Nigeria’s FX receipts from its highest FX revenue earner – the oil and gas industry, which is a significant source of the Nigerian Government’s royalty and income taxes earnings (PPT, CIT and HT) that are denominated in US Dollars,”, he stated.
“However, it is important to highlight certain contractual, legal, financial and factual incongruencies that exist in the increasing push and demands on petroleum producers and particularly on members of the IPPG.
“We are indeed constrained to say that the current position on this matter may inevitably lead to economic damage and self-sabotage of the Nigerian economy. This is simply an inescapable fact,” Isa added.