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Recently, the Federal Executive Council (FEC) has directed the full implementation of the Naira-For-Crude policy for local refineries.
The Naira-For-Crude policy, introduced in 2024, involves the sale of crude oil to domestic refineries: the refinery of dangoes and others in Naira instead of US dollars.
The resolution of the FEC on politics was broadcast by Wale Edun, Minister of Finance, who provided insights.
Edu explains
According to EDA, “therefore, sales of raw and refined products in the Naira initiative are not a temporary intervention or tied to time, but a key political directive designed to support sustainable local refining, strengthen energy safety and reduce dependence on changes in the internal oil market,” said the minister.
Political analysts say that the last move, if expanded and applied, could become a turning point in the oil sector.
According to observers, according to politics, there would be no more agreements in half and a half; No longer allow the Naira to be treated as a second -class race in her country.
It is worthy of remembering that some interested parties have long before the FEC directive, with the full implementation of politics.
Senate in full support
Sen Ned Nwoko (APC Delta-North) had been vocal in supporting the Naira-For-Crude policy and enriched the need to create a coherent and structural question for Naira.
Nwoko had always argued that the nation could not expect naira to acquire strength if its use was not a priority in its economy.
According to him, the optimization of the Naira includes the payment of salaries, the signature of the contracts and, of course, the sale of flocks to Naira.
Nwoko, who is the president of the Senate’s ad hoc committee for crude oil theft, said that politics in other sectors must be replicated.
“We should start building a currency that commands respect, not pity. Even more important, it is economic dignity; Nigeria is the only country in which foreign currencies are treated as the Gold Standard also within its own borders.
“Of course, this will not solve everything during the night, but the implementation will be the key and we have seen policies escape first, but certainly not this if we stick to the rule. So, the tone has moved; this is no longer an experiment of six months; this is the national direction ”, he said.
Although Nwoko’s defense was considered idealist in some Quartres, it was relentless and pushed for a bill to prohibit the use of foreign currencies in internal transactions, a controversial but necessary move. Controversial because that move is like driving against traffic since some powerful people are behind it.
His argument was that as long as the owners collect the rent in dollars and the expatriates were paid in pounds, the Naira would have continued to suffer in its home.
Also leader of work
In his evaluation, Peter slender, former president of the Union Congress (Tuc) said that the new FEC directive was a welcome development.
According to Exile, also former president of the Petroleum and Natural Gas Senior Staff Association of Nigeria (Pengassan), the directive has long been expected.
“It is only that most of the time in this part of the world, we only do things arbitrarily; therefore, as the proverb says, it is better late than ever.”
He said that the benefits of the rough Naira-For Grude system were enormous as politics would strengthen Naira and would help companies seek local currencies.
“It will strengthen our local currency and will also help companies look for local currencies and do not take dollars, which is scarce.
“And one of the reasons why you have our currency that moves from N1, 300, 300 and N1.700 sometimes going to almost N2,000 to the dollar is because of the question,” he said.
The former president of the Union of Labor added that Nigeria was the only country in which some products had a price in dollars.
“Do not go to America and then you are now evaluating things in euros; no, or go to the United Kingdom and start evaluating things in dollars.
“There are some real held in Nigeria; all their prices are in dollars; it is not done anywhere. So, all that should be purchased in Nigeria must be done in the local currency.
“And this is positive for potential investors in refineries, knowing that they can get the crude oil offer in Naira and will not go to shoot or looking for dollars; therefore it is a victory. It is advantageous for our economy and is also advantageous for our national security.”
Exile said that the impact of the new policy on the oil product would however be negligible.
“Maybe two naira or three naira, but in the end, it will not be as wide as we could think; this is because the government is selling crude oil to Naira; it is not selling outside the international price of crude oil,” he said.
The economist throws more light
In the same way, Mr. Ifidon Coker, an economist, said that the Naira-For-Crude policy mainly aimed to reduce the pressure on the change of changes and strengthen the Naira allowing national buyers to pay crude oil in the local currency (Naira) instead of in the US dollars.
According to Coker, economically, it has some main economic benefits that include the reduction of foreign currency demand.
“Since crude oil transactions generally require dollars, insisting on Naira’s payments reduces the demand for dollars, helping to stabilize and possibly strengthen the Naira compared to other currencies.
“It will improve liquidity in the Naira market by encouraging the large transactions of the oil sector in Naira; politics increases Naira’s liquidity within the economy, making more funds available for loans and investments.
“Local industries will also increase, ensuring that national refineries and oil marketing experts can now buy a crude oil in Naira, reducing their exposure to the fluctuations of the exchange rate and making them easier to plan and operate.
“This can help Nigeria approach energy self -sufficiency.”
He also said that politics would improve monetary policies as with less dependence on dollars, the central bank of Nigeria (CBN) could better manage inflation and other macroeconomic variables, since it has reduced external shocks related to the volatility of the foreign currency.
“The encouragement of investments in the oil sector will bring easier access to crude oil in the local currency and encourage private investments in the refining and related sectors, promoting industrialization and the creation of jobs.
“This policy will also make a reduction in the capital escape; since the transactions are performed in Naira, there is less incentives to move large sums of money abroad for the oil trade, which can help to retain the capital within Nigeria.
“It will strengthen national economic sovereignty, because politics will promote greater control over the strategic resource of Nigeria and reduce dependence on the global oil market dominated in dollars.
“Politics is truly excellent with which any good economist and interested citizens would say and in fact would align itself; however, because these benefits fully materialize, politics must be implemented transparently, supported by adequate refining skills and supported by larger reforms in the oil and financial sectors,” he said.
Experts say that the Naira-For-Crude policy is a commendable initiative that will lead to the reduction of the pressure of changes, the stabilization of the prices of oil products and, in turn, a decline in food inflation.
