Depot Owners Give Reasons as They Criticise Naira-for-Crude Deal
- The Federal Government's sale of crude oil to the Dangote Petroleum Refinery in naira was criticized by depot owners
- According to their executive secretary, the naira-for-crude-oil transaction structure carries significant risks
- He warned that Nigeria would be shut off from global markets if it didn't follow this international standard
Legit.ng journalist Zainab Iwayemi has 5-year-experience covering the Economy, Technology, and Capital Market.
Olufemi Adewole, the Executive Secretary of the Depot and Petroleum Products Marketers Association of Nigeria, has criticised the Federal Government's naira-based sale of crude oil to the Dangote Petroleum Refinery.
Source: Getty Images
Adewole asserted that there are serious dangers associated with the naira-for-crude oil transaction structure, which might have an impact on Nigeria's foreign exchange stability and discourage foreign direct investment.
In a statement on Monday, Adewole expressed concerns about the volatility of the naira and emphasized that crude oil transactions were traditionally conducted in US dollars due to its stability and international acceptability.
This comes as the Dangote refinery suspended the sale of gasoline in naira because the Federal Government allegedly refused to sell more crude in naira to the facility.
How Depo owners reacted
Adewole issued a warning that if Nigeria doesn't conform to this international norm, it may be cut off from international markets, which would reduce trade prospects and deter foreign investment.
“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 that in order to maintain national competitiveness, policy must acknowledge the special characteristics of the oil and gas industry.
Reactionary policies, he pointed out, frequently provide disproportionate economic gains that favor a small number of industry participants over the overall economy.
Adewole claimed that linking crude oil transactions to the naira might make these issues worse, citing the currency's historical instability brought on by inflationary pressures and volatile 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 argued.
Source: Getty Images
He further warned that the naira-for-crude trades could create an unsustainable pressure on Nigeria’s foreign exchange reserves.
The DAPPMAN boss underlined that the Central Bank of Nigeria might struggle to maintain currency stability with insufficient dollar inflows, resulting to further 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 explained.
Petrol imports hit 154 million litres weekly
Legit.ng reported that about seven vessels carrying imported petrol are expected to dock at seaports between Monday, March 17 and 23, 2025.
This is according to a document from the Nigerian Ports Authority released on Thursday, 20, 2025, revealing that the vessels are carrying 115,000 metric tonnes, representing 154.22 million litres of petrol.
These vessels will bring the products via three seaports in Nigeria to boost fuel supply nationwide.
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Source: Legit.ng
