Naira-for-Crude Policy Shields Nigeria from Global Fuel Supply Disruptions
The Presidency has declared that Nigeria's innovative naira-for-crude policy is effectively protecting the country from the severe fuel supply shocks triggered by the ongoing Middle East crisis. Senior Special Assistant to the President on Media and Publicity, Temitope Ajayi, emphasized on Wednesday that this initiative, introduced by President Bola Tinubu, has ensured steady availability of petroleum products despite growing global supply disruptions.
Policy Details and Implementation
Ajayi noted that the policy, which was approved in July 2024, enables crude oil supplied by the Nigerian National Petroleum Company Limited to be paid for in naira by the Dangote Refinery. This strategic move strengthens domestic refining capabilities and significantly reduces Nigeria's exposure to foreign exchange pressures. According to him, the initiative took effect on October 1, 2024, and is being driven by a technical committee led by the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, alongside the Executive Chairman of the Nigerian Revenue Service, Zacch Adedeji, among other key stakeholders.
Global Context and Impact
He explained that the policy has provided a critical buffer as the conflict involving Iran, Israel, and the United States continues to disrupt global energy markets. The situation worsened following Iran's closure of the Strait of Hormuz, a major maritime route responsible for over 20 percent of global oil and gas flows. "The disruption has triggered a sharp rise in global energy prices, placing immense pressure on many economies, particularly import-dependent countries," Ajayi stated.
Nigeria's Supply Stability
Despite the global surge in fuel prices, the Presidential aide stressed that Nigeria has avoided the acute shortages seen in several parts of the world. "While prices have adjusted in line with global realities, Nigeria has maintained supply stability. There are no widespread queues, and products remain available nationwide," he affirmed. He attributed this stability to the operational capacity of the Dangote Refinery, which has met domestic demand and positioned Nigeria as a key supplier of refined petroleum products to other African countries, including South Africa and Kenya.
Vulnerabilities of Import-Dependent Nations
Ajayi further noted that the global crisis has exposed vulnerabilities in countries that rely heavily on imported refined products, with many now experiencing supply chain disruptions and emergency energy measures. "In contrast, Nigeria's investment in local refining is paying off. The Dangote Refinery has ramped up production and prioritised domestic supply, ensuring uninterrupted availability of petroleum products," he highlighted.
Price Moderation and Regional Support
He also underscored efforts to cushion the impact of rising global oil prices on Nigerians, noting that the refinery recently reduced petrol prices by N75 per litre despite higher crude procurement costs. "This demonstrates the value of local refining in moderating price shocks and ensuring energy security," Ajayi added. According to him, Nigeria is leveraging the refinery's capacity to support regional energy needs, with nearly 500,000 tonnes of refined products exported to African countries in March alone.
Long-Term Energy Security
He emphasized that beyond immediate supply stability, the naira-for-crude policy and local refining capacity are central to Nigeria's long-term energy security and economic resilience. "The Dangote Refinery represents more than an industrial investment; it is a cornerstone of Nigeria's energy sovereignty and a driver of sustainable economic growth," Ajayi concluded.
