Nigeria Says It’ll Save $7.2bn Annually After Directing NNPC To Sell Crude To Local Refineries in Naira

President Bola Tinubu on Monday directed the Nigerian National Petroleum Company Limited (NNPC) to immediately commence engagement with local refineries including Dangote Refinery in transactions dominated in Naira.  

This was disclosed to newsmen by the

 Special Adviser to the President on Revenue, Dr Zacch Adedeji, at the State House,  after the Federal Executive Council (FEC) meeting presided ove by President Tinubu.

According to him, apart from 

extending the sale of crude oil to Dangote Refineries, it will also include sale of Dangote’s products to others to be conducted in naira.

 He said the decision aims to mitigate the heavy reliance on foreign exchange for crude oil imports, which currently accounts for roughly 30 to 40 percent of Nigeria’s forex expenditure.

Adedeji, who also doubles as Chairman of Federal Inland Revenue (FIRS) further explained that by denominating transactions in naira, the federal government expects to significantly reduce its FOREX burden as well as estimating annual savings of around $7.3 billion.

He stressed that this shift will stabilize crude oil prices domestically by minimizing the impact of FOREX fluctuations.

Adedeji said the new policy is anticipated to ease the pressure on Nigeria’s foreign exchange reserves, reducing monthly FOREX expenditure on petroleum products to $50 million from approximately $660 million.

He added that as part of the implementation, AFREXIM Bank has been selected as the pilot settlement bank to facilitate these transactions.

His words: “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.

“What does it mean to our economy? One, the pressure on foreign exchange will be reduced”.

Adedeji said Nigeria currently spends between 30% to 40% of its foreign exchange on importation of PMS that it consumes, adding “monthly, we spend roughly $660 million in these exercise and if you analyze that will give us $7.92 billion annually”.

The Presidential Adviser, said, “with this approval today through FEC, led by Mr. President, this has reduced by minimum of 90% because what we have today, will mean transaction is now done in our local currency, not only with Dangote Refinery, but to all local refineries for all our local consumptions and this will actually stabilise the pump price. 

“This will also make economic predictability a reality because we will no longer rely on the fluctuations that happen in FOREX. This is an innovation to solving our problems as a country today.

“Just to be specific, I’ll just read parts of the benefits. Number one, which is major, is the reduction in foreign exchange pressure, as the existing process that we have today utilises $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.

“Also, as a pilot, Council has approved that a settlement bank, which in this instance is AFREXIM Bank, whould 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 the mainstay of our economy.

“So I congratulate the Council members, Mr. President, and also congratulate the operators; the NNPC and Dangote Refinery and also the lead arranger AFREXIM Bank because kudos should go to the President of the African Export-Import Bank (AFREXIM Bank), Prof. Benedict Oramah, for this initiative because these are people that work behind the scenes to make sure that what we witnessed today happened.

“One of the major directives of Mr. President and the Council in general, is that AFREXIM leads the advisory work of structuring and arranging this initiative with the Associated Trade Finance Facility, in collaboration with the Central Bank of Nigeria, the Nigerian National Petroleum Corporation Limited and Federal Ministry of Finance and other critical agencies”, he said.

Also on Monday,the Federal Government has allayed the fears of non-compliance with the new minimum wage, saying the extensive negotiations and consensus-building undertaken from early February to July, 2024 meant all the relevant stakeholders were involved.

Minister of State for Labour a d Employment, Hon. Nkeiruka Onyejeocha, while answering reporters’ questions on what government would when people do not pay said “The most important thing is that this minimum wage has been passed and that all Nigerians were involved—all the stakeholders, the governors, the representatives of the local government, which is ARGON and of course, the organised private sector and organised labour and the government itself.

“Conversations were held and it passed through the process, and it has become law and I believe that we are responsible Nigerians and we want to promise Nigerians that we’re going to do that.

“When you have a strong leader, who has the goodwill of the people he governs and there is cooperation, I believe that everybody will comply with what is agreed upon.”

Onyejeocha also stated that the federal government would uphold its promise to backdate the payment of the adjusted wages to May 2024.

Her words: “I think it is being considered because what I read was exactly what was in agreement of October 2, 2023, and I believe that those things are still being considered. But the most important thing is that the minimum wage has been signed.”

President Tinubu has also questioned the rational for the planned protest scheduled for August 1, especially when he is already addressing most of the challenges confronting the nation, particularly those concerning the youths. 

Minister of Information and National Orientation, Mohammed Idris, who revealed that the issue of the proposed protest came up for deliberations at Monday’s Federal Executive Council meeting.

Idris said, the recent student loan policy of the Federal government was targeted at the youth population such that no Nigerian child who secures admission will drop out on account of inability to afford fees.

The Minister said the distribution of truck loads of rice to state governments across the country and additional stucks to be sold at subsidised prices were all geared towards alleviating the suffering of the people. 

Idris described the President as a listening President who will not stand akimbo and watch citizens suffer unjustly. 

According to him: “The position of FEC is that most of the demands that the protesters are making are actually being addressed by the federal government and therefore it is the view of the government that there is really no need for the protests again because most of those things that the protesters are  putting forward are already actually been addressed or are being addressed by government.

“Like we have said repeatedly, this is a listening government.  The President has listened to the voices of all those who are planning this protest and the message is that there is no need for it.”

Idris further revealed that the President was already protesting on their behalf by doing those things that they want government to do, for example, the effort that government is making, in ensuring that food is being made available. 

He said: “The last Council meeting here at the briefing, we announced that a number of trucks 20 precisely had been given to the state governors for onward distribution to those who actually are in need of them, the poorest of the poor in society and those who are actually in need, but government did not stop there. 

“There is also rice  that is being sold at about 50% of its cost, a bag of rice is being sold as we speak now. This rice have been taken to various centers across all the states of the Federation, and is being sold at N40,000, centers have been created. So that those who need this rice can go there and buy this rice at N40,000.

“In the first instance, about 10 trucks have been made available to each of these states and indeed, this is just to begin, I know that some of the comments you hear is that it is never enough. 

“Government has not pretended that these supplies are indeed enough. But these are necessary first steps that are being made and more of such interventions are being made in the interim. Of course, this is like I said an interim measure because there is so much investment that is going into the agricultural sector. 

“The rainy season is here. We expect that the prices of food items will come down as investments are also being made not just for the traditional.….. Agricultural Produce, but also for the irrigation activities in many of these states of the federation. So, we expect that as we move forward, prices of food items, commodities will of course, come down. 

“These are part of of the measures and the President feels and the federal executive council believes that already some of the youth wont protest, some of the answers that they are looking for are already actually being provided. For example, only recently the federal  government begun the disbursement of the students loans. There’s a provision already for over two million students. 

“Only about 110,000 applications have thus far been received as at last week, of course, more are going to come. So there’s adequate provision for all those who are qualified, who can access these loans and who have fulfilled this condition. The desire of Mr  President is that no. student no young person that has gained admission into any of our tertiary institutions will be left out because his parents or his guardian is unable to pay for his fees. 

“But beyond that, there is also the provision that is being  made for these young people. We are aware of the effort that is being  made to ensure that about 3 million of them are being put into employment through the MTT program. There  is also for the general public the reduction that is envisaged by the time the CNG initiative of the federal government actually takes full course.

“Already some of these buses have been imported. Some of the conversion kits are already available. The conversion centers are already beginning to get active. The delays are largely because you don’t just go to the market and get these things off the  shelves. First the procurement processes have to be followed. And then of course you have to place order for them and it is envisaged that as we make the transition from  fossil fuel to renewables, there is going to be a reduction of over 60% in the cost that people put in transportation.”

FEC also approved various agreements involving the repatriation of fugitives from justice and prisoners’ swap between Nigeria and the Kingdom of Spain. 

Attorney General of Federation and Minister of Justice, Lateef Fagbemi said the measure, which will also be signed with other countries, will ensure that nobody can escape justice. 

His words: “As you all know, there are three stages. The first one is the investigation aspect. The second one is the prosecution of the sentencing and ensuring that you serve the sentence as a deterrence. 

“Before now there have been what  you called trans border inhibitions, where somebody who is wanted in Nigeria for example, goes beyond the borders of Nigeria to get him arrested. 

“Suppose you need any document that is not within but you know where he can be reached how do we get this document? 

“Somebody is trying to escape justice. How do you get him back him and after sentencing? 

“Some countries have policies that says okay, ‘let’s the convict come back home.’

“So, all these three stages are being addressed. We will do it country by country. But for today, the ones dealt with was the one concerning the kingdom of Spain, Nigeria and the Kingdom of Spain. 

“So, we three took memos in quick succession, one dealing with exchange of information including investigation. 

“We have an agreement which was signed way back in June 2022. So, after the agreement, what the law requires is that you should come back and have it ratified. And it was presented to Council today of course. “And then under the leadership of our great leader and the president, sitting chair, it was passed.

“The second one had to do with the exchange of assistance to bring back fugitives, people trying to escape from justice. 

“So, is either you bring them to justice or take justice to them. So, this second aspects of the mutual assistance has been ratified. 

“The third in the series has to do with after conviction what do we do?  Some will say okay, if you have these convictions, can you bring the person back home to serve his sentence here? The same thing goes any coming from, especially to the country we have agreement with, in this case Spain. 

“So. we have an agreement that either way, we can exchange persons sentenced to either serve their sentence here or there.

“So, these has significantly shown that there is no hiding place for criminals. If they go outside the shores of the country, they can rest assure that the arms of the law is long enough to reach them. 

So, these are the three memos from the Ministry of Justice which the FEC considered an approved.”

Also, FEC approved the implementation of road projects in various states of the federation worth about N1,455,17,000,000. 

Minister of Works, Dave Umahi, who disclosed this spoke against the backdrop of the directive by FEC stepping down some projects on July 10 to enable a review. 

According to him, even though some other projects were similarly stepped down during Monday’s meeting, the council gave its nod to several ither projects. 

Umahi explained: “The first one is rehabilitation of Abeokuta-Iboro-Ilaro Road in Ogun state. It’s a contract some of N57bn approved by FEC today for Strabic Construction.

“The second one is the road from Mubi to Maiduguri Road section three. The contract is approved for a total sum of N89bn and this is an NNPC project, it is being reviewed and approved for N89bn total contract sum and that is for MESSRS Decency Associates Limited. 

“Then the third project approved today was Mubi to Maiduguri Section Two. The story about this is that we have sections 1,2,3,4. Section 1 is an ongoing project. Then section 2 was not awarded to a contractor. Section 3 is an ongoing project and then section 4 was awarded to Zephagold. But the governor of Borno state wrote that he is already on this section 4 and the job is about being completed. So, he requested that we go back to Section 2, where there is no contract ongoing. 

“And so by going back to Section 2, it means that the entire stretch of Mubi will have a stretch of ongoing projects. But this section 2 is also very bad. So, we had to re-procure it on rigid pavement. So the relocation is approved. The relocation is approved for 42km at a contract sum that was awarded before. It’s not increased N67bn inherited from the past administration. 

“And then we have the Natalla-Buru in Kano State. We stepped it down to look for funds. There is no funds for it. So, we stepped it down and we liaise with the National Assembly if they will give us funds. 

“So, the next one is the Benin-Akure-Ilesha Road, and that’s 150km by two. So, we’re looking at 300km here and the total contracts on his N525bn awarded to HiTech Construction to use concrete pavements to do it. So it’s been approved. 

“Then we have the third one; Benin-Akure, by Ilesha. That’s section 2, and that’s 66km awarded to HiTech Construction. To know that this project has been on in terms of procurements in September 2023. It is part of the supplementary budget but because we didn’t have enough funding, we couldn’t present it but now we have three stretches of funding. And that’s why we are presenting it. 

“So, this one is 66km and it is dualised for N286bn in favour of HiTech Construction for concrete technology. 

“The next project is Angingali-Udobi-Udona-Umo-Uwana-Ubalaka. And that is in Imo state, and that is a review. It is an NNPC project being reviewed from N14bn to N26.46bn. 

“And then you have Ojo-Odum-Okuku Road Benue State is stepped down for review and to be brought back in the next FEC. 

“We have another NNPC project and that is the rehabilitation of Aba-Owerri Road, NNPC depot expressway in Abia state, and the project has been reviewed in favour of a rudo Nigeria limited in the sum of N21bn. 

“We have another project going from Odukpani Itu in Ikot-Ekpene in Cross Rivers State and it’s being handled by CCECC. This is one of the companies that we are likely to aggregate all their projects across the country and agree with them on milestone completion and how much they can inject while we now agree on payment schedule. 

“So, this project has been reviewed from N50bn to N79bn because the terrain is very bad. And we decided to use reinforced concrete pavement to do the two carriage ways. 

“Then we have the rehabilitation of Enugu-Port Harcourt again by CCECC. They had started the project about four years back at the Port Harcourt axis and they’re going towards  Aba and the project is revised from N63bn to N83bn in favor of CCECC. 

“Then we have Igomu bridge, also an inherited project in a very critical condition, the bearings are gone. You have a concrete-to-concrete contact and a part of the bridge was also burnt. So, we had to do a total procurement to rehabilitate it. And it’s a total of 19.87bn in favour of Buildwell Nigeria Limited. 

“We have one project in Umuahia to Aba by Arab Contractors, and that is the Aba section which was stepped down to be reviewed. But the project is 85% in completion. 

Then we have the last section of the Ikot-Ekpene road from Akwa Ibom and it’s being done by Julius Berger and the project is reviewed from N54bn to N90bn and to be procured and executed in reinforced concrete. 

“And we have the Ore-Ondo-Akure Road which is under special intervention due to flooding and that is 24 months duration for a total contract sum of N134bn in favour of CBC Nigeria Limited that will use concrete because of the terrain. 

“And lastly, you have the Ofin-Oreta Road, Ikorodu in Lagos state and that project is in favour of GRB for a construction period of 18 months for N27.9bn. That’s all that we got approval for today.”

Deji Elumoye 

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