Market News

By Abdullateef Aliyu

Petroleum marketers under the umbrella of Depot and Petroleum Products Marketers Association of Nigeria (DAPPMAN) yesterday said the Naira-for-Crude Oil policy of the federal government poses “Significant risks that could affect Nigeria’s foreign exchange stability and deter Foreign Direct Investment (FDI).”

Executive Secretary of the association, Olufemi Adewole spoke in Lagos amidst the raging debate over the sustainability of the policy.

The policy, which started in October last year to supply crude oil to Dangote Refinery in naira has collapsed prompting Dangote to suspend sale of its products in naira to prevent significant losses.

Stakeholders and experts have warned of the impact of the collapse of the naira-for-crude policy even as the committee on the implementation of the policy is said to be considering an extension of the policy.

But DAPPMAN yesterday noted that crude oil transactions are traditionally carried out in U.S. dollars due to its stability and global acceptability.

He cautioned that failure to align with this international standard could isolate Nigeria from global markets, diminishing trade opportunities and discouraging investment inflows.

Adewole also warned that Naira-for-crude transactions could place an unsustainable burden on Nigeria’s foreign exchange reserves.

He argued that the Central Bank of Nigeria (CBN) might find it extremely difficult to maintain currency stability amid insufficient dollar inflows, leading to additional 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.

“The global oil market operates in U.S. 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 called for policies that recognise the unique nature of the oil and gas sector to ensure sustained national competitiveness.

According to him, “reactionary policies” often create skewed economic benefits that primarily favor select industry players rather than the broader economy.

“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.

“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.