The Federal Executive Council (FEC) has taken decisive action to strengthen Nigeria’s economic resilience. They directed the full implementation of the Naira-for-Crude Oil policy. This move revives the suspended agreement between the Federal Government and the Nigerian National Petroleum Company Limited (NNPCL). It also includes local refiners, such as the Dangote Petroleum Refinery.
The Ministry of Finance confirmed the development via its official X (formerly Twitter) handle on Wednesday. This was under the update titled: “Update on the Crude and Refined Product Sales in Naira Initiative.”
This renewed directive marks a strategic shift in Nigeria’s approach to petroleum trade. It aims to reduce the country’s longstanding dependence on foreign exchange in crude oil transactions. The initiative also aligns with efforts to encourage sustainable domestic refining and ensure energy independence.
The Naira-for-Crude agreement was introduced in late 2024. It was initially designed as a temporary six-month intervention. The goal was to support local refiners by allowing the purchase of crude oil using the naira instead of U.S. dollars. The arrangement lapsed on March 31, 2025. There was no immediate renewal. This prompted the Dangote refinery to revert to pricing refined products in foreign exchange.
The policy’s suspension triggered concerns among stakeholders. They were worried about the viability of local refining efforts. This concern is especially relevant now. Nigeria is seeking to reduce the pressure on its foreign reserves. The country aims to stabilize the naira.
After deliberations, the Technical Sub-Committee on the Crude and Refined Product Sales in Naira Initiative met. An update meeting was held on Tuesday. They reaffirmed that the measure is no longer a stop-gap. It is a permanent fixture in the nation’s energy and economic strategy.
According to the Finance Ministry’s statement, the policy “is not a temporary or time-bound intervention, but a key policy directive designed to support sustainable local refining, bolster energy security, and reduce reliance on foreign exchange in the domestic petroleum market.”
The government emphasized its unwavering commitment to the policy’s full implementation. It stressed its relevance in stabilizing the downstream oil sector. It also noted its importance in improving macroeconomic stability.
This directive is expected to provide a lifeline to indigenous refiners, particularly the $19 billion Dangote Refinery, which began limited operations earlier this year. The plant is seen as a game-changer for Nigeria’s energy sector, with the potential to refine 650,000 barrels per day when fully operational.
With the naira under constant pressure in the foreign exchange market, the government believes that localizing crude transactions will curb demand for dollars. It will ease the strain on foreign reserves. The aim is to moderate inflationary trends caused by fluctuating fuel prices.
Additionally, this move supports the Central Bank of Nigeria’s (CBN) broader monetary policies aimed at achieving exchange rate stability. Analysts also believe the policy could help in closing the supply-demand gap in the local petroleum products market.
Economic experts have applauded the FEC’s decision, stating that a full rollout could enhance investor confidence in the downstream oil sector, especially if coupled with transparency and improved regulatory oversight.
Speaking anonymously, a senior executive at a local modular refinery described the move as “a breath of fresh air,” noting that access to crude in naira reduces the cost of operations and helps maintain competitive pump prices for consumers.
However, experts have cautioned that the policy must be implemented alongside other reforms. These include deregulation, pipeline security, and ensuring that local refiners meet global standards in terms of output quality.
There are also calls for clear frameworks on pricing, supply allocations, and how the government intends to manage conflicts that may arise between export obligations and domestic demands.
Interestingly, the temporary suspension of the initial deal had wider implications. According to reports, the halt in NNPC’s crude supply to Dangote and other local refiners impacted Nigeria’s crude production volumes, inadvertently affecting its contributions to the Organization of the Petroleum Exporting Countries (OPEC) output quota.
By ensuring domestic utilization of crude oil while still meeting OPEC commitments, Nigeria seeks to strike a delicate balance between internal energy needs and international production obligations.
The Federal Government’s decision to institutionalize the Naira-for-Crude initiative marks a significant milestone in Nigeria’s drive toward economic sovereignty. As local refining scales up and foreign exchange pressure eases, the success of this policy could serve as a model for other resource-rich but import-dependent nations.
To ensure sustainability, experts emphasize the need for legislative backing, private sector engagement, and transparent monitoring mechanisms. If effectively implemented, this bold move could redefine Nigeria’s oil economy and solidify its path toward energy self-sufficiency.