Abuja: Recently, the Federal Executive Council (FEC) directed the full implementation of the Naira-for-Crude policy for local refiners. The policy, introduced in 2024, involves selling crude oil to domestic refineries like Dangote Refinery in naira instead of U.S. dollars.

According to News Agency of Nigeria, the FEC’s resolution on the policy was conveyed by Wale Edun, the Minister of Finance, who stated that the policy is a key directive to support sustainable local refining, bolster energy security, and reduce reliance on foreign exchange in the domestic petroleum market. Policy analysts suggest that if expanded and enforced, this move could significantly impact the oil industry.

Observers note that the policy aims to eliminate the perception of the naira as a secondary currency within Nigeria. Stakeholders have long advocated for its full implementation. Sen. Ned Nwoko, a vocal advocate, emphasized the importance of creating structural demand for the naira to strengthen it. He argued that optimizing the naira includes conducting transactions, such as selling crude, in the local currency.

Nwoko, who chairs the Senate Ad-hoc Committee on Crude Oil Theft, highlighted the need to extend the policy to other sectors to build a respected currency. He also pushed for a bill to ban foreign currencies in domestic transactions, arguing that current practices undermine the naira’s value.

Mr. Peter Esele, former President of the Trade Union Congress (TUC), welcomed the FEC’s directive, describing it as overdue. He highlighted the policy’s potential to strengthen the naira and encourage businesses to prioritize local currencies. Esele pointed out that Nigeria is unique in pricing certain commodities in foreign currencies, which he believes should change.

Economist Mr. Ifidon Coker explained that the Naira-for-Crude policy primarily aims to reduce foreign exchange market pressure and strengthen the naira. He outlined several economic benefits, such as increased naira liquidity and support for local industries. Coker emphasized that the policy could help Nigeria achieve energy self-sufficiency and strengthen economic sovereignty.

Experts believe the Naira-for-Crude policy could reduce foreign exchange pressure, stabilize petroleum product prices, and decrease food inflation. However, successful implementation requires transparency, sufficient refining capacity, and broader reforms in the oil and financial sectors.