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President Bola Tinubu has approved a new directive to promote the trade of crude oil using the local currency.
The Federal Inland Revenue Service (FIRS) Chairman, Zacchaeus Adedeji, disclosed this to State House correspondents on Monday after the federal executive council (FEC) meeting at the Presidential Villa in Abuja on Monday.
Effective immediately, the Nigerian National Petroleum Company (NNPC) Limited will engage with local refineries in transactions dominated in Naira.
This move was also extended to the sale of crude oil to Dangote Refinery, with the subsequent sale of Dangote's products to others also to be conducted in Naira.
The decision aimed to mitigate the heavy reliance on foreign exchange for crude oil imports, which currently accounts for roughly 30 to 40 per cent of Nigeria's forex expenditure.
The FIRS boss further explained that by denominating transactions in Naira, the federal government expected to significantly reduce the forex burden, estimating annual savings of around $7.3 billion.
The shift will stabilise crude oil prices domestically by minimising the impact of forex fluctuations.
The new policy is anticipated to ease the pressure on Nigeria's foreign exchange reserves, reducing monthly forex expenditure from $50 million to approximately $600 million.
As part of the implementation, Afreximbank has been selected as the pilot settlement bank to facilitate the transactions.
