- Nigeria officially begins crude oil sales in Naira, moving away from dollar transactions to stabilize its economy
- Experts weigh in on potential benefits, including reduced currency volatility and enhanced local investment
- The Nigerian National Petroleum Corporation (NNPC) commits to a smooth transition with measures to ensure transaction security
In a landmark decision to bolster its economy and stabilise the national currency, Nigeria has officially commenced crude oil sales in Naira, the country's local currency.
This move, which took effect on October 1, 2024, is expected to have significant implications for both the oil sector and the overall Nigerian economy.
The announcement was made by the Minister of Petroleum Resources, who emphasised that this shift would reduce the country’s dependency on foreign currency, particularly the US dollar, for oil transactions.
"This initiative is a crucial step toward economic independence and aims to enhance the liquidity of the Naira," the minister stated during a press conference in Abuja.
Historically, Nigeria has conducted its oil sales predominantly in dollars, a practice that has been a major factor in the volatility of the Naira. By transitioning to sales in Naira, the government aims to stabilise the currency, attract foreign investments, and bolster local businesses engaged in the oil and gas sector.
Economic analysts have expressed cautious optimism regarding the initiative.
"While this move could potentially strengthen the Naira and provide a buffer against external shocks, its success will largely depend on the government's ability to manage the policy effectively and maintain investor confidence," said Dr. Aisha Balogun, an economist based in Lagos.
The Nigerian National Petroleum Corporation (NNPC) has already begun implementing the new pricing system, with several local and international buyers reportedly expressing interest in purchasing Nigerian crude in Naira.
The NNPC has assured stakeholders that mechanisms are in place to facilitate smooth transactions and mitigate potential risks associated with currency fluctuations.
In addition to promoting the use of the Naira, the government has outlined plans to enhance the overall investment climate in the oil sector. This includes improved regulatory frameworks, increased transparency, and greater engagement with local communities affected by oil exploration and production.
The move has also drawn reactions from the international oil market, where analysts are watching closely to see how this transition will affect Nigeria’s oil exports and its relationships with foreign buyers. Some experts warn that if not managed carefully, the shift could lead to unintended consequences, including disruptions in existing contracts.
As Nigeria embarks on this bold new chapter, the government is urging citizens and businesses alike to embrace the initiative, stating that a strong naira is crucial for the nation’s economic growth and stability.
NNPCL allocates 48.6 million barrels of crude oil to Dangote Refinery
Meanwhile, TheRadar earlier reported that the Nigerian National Petroleum Company Limited (NNPCL) had allocated a total of 48.6 million barrels of crude oil to the Dangote Petroleum Refinery over the past ten months, according to recent reports.
Official data revealed a steady stream of deliveries to the refinery, with 3.4 million barrels supplied in December 2023 and 3.5 million barrels in February 2024.
