The Executive Secretary of the Depot and Petroleum Products Marketers Association of Nigeria, Olufemi Adewole, has expressed opposition to the Federal Government’s policy of selling crude oil in naira to the Dangote Petroleum Refinery.
Adewole argues that the “naira-for-crude oil transaction framework presents significant risks that could affect Nigeria’s foreign exchange stability and deter foreign direct investment.”
This follows the suspension of sale of petrol in naira due to the Federal Government’s alleged refusal to sell more crude in naira to the facility.
In a statement on Monday, Adewole expressed concerns about the naira’s volatility, noting that crude oil transactions have traditionally been conducted in US dollars due to its stability and global acceptance.
He warned that not adhering to this international standard could isolate Nigeria from global markets, reduce trade opportunities, and deter investment inflows.
“The global oil market operates in US dollars due to its stability. Continuing the policy could alienate trade partners and investors who rely on the predictability of the dollar,” he stated.
Adewole emphasized the need for policies tailored to the unique nature of the oil and gas sector to maintain national competitiveness.
He noted that “reactionary policies often create skewed economic benefits that primarily favour select industry players rather than the broader economy.”
Adewole argued that linking crude oil transactions to the naira could worsen existing challenges, citing the currency’s historical instability due to inflation and fluctuating exchange rates.
“The naira has experienced significant fluctuations over the years, driven by inflation and exchange rate instability. If crude oil transactions are linked to the naira, these issues will only worsen, potentially triggering capital flight and causing foreign investors to seek alternative markets. This would negatively impact Nigeria’s economic growth, the sustainability of the sector, and the efficiency of the oil and gas value chain,” the DAPPMAN boss explained.
He further cautioned that conducting crude oil transactions in naira could put an unsustainable strain on Nigeria’s foreign exchange reserves.
He warned that limited dollar inflows could hinder the Central Bank of Nigeria’s ability to stabilize the currency, adding to economic strain.
“It is almost inevitable that implementing this policy could further deplete Nigeria’s foreign exchange reserves. The CBN may find it increasingly difficult to stabilise the naira due to inadequate dollar inflows. Given that oil transactions have historically been a primary source of foreign exchange, disrupting this mechanism will likely intensify economic pressures,” he noted.
Although the Federal Government argued last year that naira-for-crude transactions could boost economic sovereignty and strengthen the local currency, Adewole disagreed, stressing that policy decisions should prioritize long-term economic stability.
“DAPPMAN supports all efforts and policies aimed at strengthening the naira. However, these strategies must be capable of driving major economic reforms that address the underlying causes of the naira’s weakness.
“Nigeria must strike a balance between national interests and global market realities. Economic policies are most effective when they are not shaped by sector-specific demands but rather by long-term economic sustainability,” he said.
