The Executive Secretary of the Depot and Petroleum Products Marketers Association of Nigeria (DAPPMAN), Olufemi Adewole, has raised concerns over the Federal Government’s policy of selling crude oil in naira to the Dangote Petroleum Refinery, warning of potential economic repercussions.
Concerns Over Foreign Exchange Stability
In a statement on Monday, Adewole cautioned that the naira-for-crude framework poses significant risks to Nigeria’s foreign exchange stability and could deter foreign direct 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.”
This warning follows Dangote Refinery’s suspension of petrol sales in naira, citing the Federal Government’s alleged reluctance to sustain crude sales in the local currency.
Impact on Global Trade and Investments
Adewole stressed that crude oil transactions have traditionally been conducted in US dollars to align with international trade norms. He warned that shifting away from this standard could isolate Nigeria from global markets, diminish trade opportunities, and discourage foreign investment.
“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.”
Economic Risks and Foreign Reserves
The DAPPMAN boss further highlighted that tying crude sales to the naira could place an unsustainable burden on Nigeria’s foreign exchange reserves. He warned that the Central Bank of Nigeria (CBN) may struggle to maintain currency stability amid insufficient dollar inflows, intensifying economic strain.
“Disrupting this mechanism will likely intensify economic pressures. It could deplete Nigeria’s foreign exchange reserves and make it increasingly difficult for the CBN to stabilise the naira.”
While the Federal Government has promoted the policy as a strategy to enhance economic sovereignty, Adewole argued that effective policies must prioritise long-term economic sustainability over short-term gains.
Learning from Global Precedents
Drawing parallels with Venezuela’s failed attempt in the early 2000s to conduct oil transactions in local currency, Adewole warned that similar policies had led to severe economic destabilisation.
“Nigeria must tread cautiously and learn from historical precedents. Policies that disrupt established international trade norms without adequate safeguards can have unintended consequences.”
Call for Sustainable Economic Policies
DAPPMAN reaffirmed its commitment to collaborating with regulators and stakeholders to promote efficiency in the downstream sector. Adewole emphasized the need for pragmatic policies that encourage investment, enhance transparency, and safeguard Nigeria’s economic stability.
“The future of Nigeria’s oil and gas sector depends on policies that balance national interests with global market realities. By fostering an enabling environment for private-sector participation, Nigeria can build a sustainable energy landscape that benefits the economy.”
