According to Zach Adedeji, Tinubu’s order to NNPC to sell crude to nearby refineries in Naira will save Nigeria $7.32 billion a year.
On Monday, President Bola Tinubu gave the Nigerian National Petroleum Company Limited (NNPC) instructions to start doing business with nearby refineries, such as Dangote Refinery, as soon as possible. These transactions will be mostly in Naira.
Following President Tinubu’s presided over Federal Executive Council (FEC) meeting, Special Advisor to the President on Rvenue, Dr. Zacch Adedeji, revealed this to reporters at the State House.
He claims that in addition to continuing to sell crude oil to Dangote Refineries, it will also involve selling Dangote’s goods to other parties for naira.
According to him, the move is intended to lessen Nigeria’s excessive reliance on foreign exchange for the purchase of crude oil, which now accounts for between 30 and 40 percent of the country’s forex expenses.
Adedeji, who also serves as the Chairman of Federal Inland Revenue (FIRS), went on to say that the federal government anticipates considerable savings of approximately $7.3 billion annually as a result of denominating transactions in naira and reducing its FOREX load.
He emphasised that by reducing the influence of FOREX swings, this change will stabilise crude oil prices domestically.
According to Adedeji, the new strategy is expected to lessen the strain on Nigeria’s foreign currency reserves by bringing down the monthly FOREX expenditure on petroleum products from roughly $660 million to $50 million.
In order to facilitate these transactions, AFREXIM Bank has been chosen as the pilot settlement bank as part of the implementation, he continued.
In his own words: “Today at the Federal Executive Council, the President delivered a directive encouraging local refineries and the Nigeria National Petroleum Corporation (NNPC) to sell crude oil and do it in our local currency.
In order to address and resolve Nigeria’s problems, Mr. President takes a unique and localised approach.
“He has given the Council approval to begin NNPC’s engagement with local refineries immediately, and we are beginning with Dangote Refinery.” That the Dangote Refinery’s sales of byproducts to distributors be made in naira, in line with the way that the refinery handles sales of crude oil.
How does that impact our economy? One, there won’t be as much strain on foreign exchange.
As per Adedeji, Nigeria now imports PMS, which it consumes at a rate of between 30% and 40% of its foreign exchange. He further stated, “We spend roughly $660 million in these exercise monthly, and if you analyse that will give us $7.92 billion annually.”
“This approval today through the FEC, led by Mr. President, has reduced by at least 90%,” stated the Presidential Adviser. “Because of what we have today, transactions will now be done in our local currency, not only with Dangote Refinery but to all local refineries for all our local consumptions and this will actually stabilise the pump price.”
Economic certainty will also become a reality as a result, as we won’t be dependent on FOREX swings. This is an inventive way to address the issues facing our nation right now.
I’ll only read a portion of the advantages to be precise. The first and most important improvement is the lessening of the demand on foreign exchange, since the current system uses $660 million monthly, or $7.92 billion yearly.
“This will drop to a maximum of $50 million each month with the new approval we have, which is only expected to be $600 million annually. This represents a 94% reduction in total and a $7.32 billion save.
This will also bring about economic predictability because we won’t be reliant on fluctuations in foreign exchange rates. This is a creative approach to solving the problems now plaguing our country.
To be exact, I’ll merely read some of the benefits. Reducing the need for foreign exchange is the first and most significant improvement, as the existing method uses $660 million per month, or $7.92 billion annually.
“With our new approval, which is only estimated to be $600 million annually, this will reduce to a maximum of $50 million each month. This amounts to a savings of $7.32 billion and a 94% reduction in total.
“When you take into account opening letters of credit between those local refineries and what happens, this will also reduce finance costs, which currently stand at $79 million.”
Additionally, as a trial, the Council has authorised AFREXIM Bank, the settlement bank in this case, to act as the primary arranger between NNPC and Dangote Refinery.
Thus, this represents a significant breakthrough in permanently resolving Nigeria’s issue. Not only will we be creating more jobs, but we will also undoubtedly be managing a key component of our economy.
“So, Mr. President, let me congratulate the members of the Council as well as the operators, Dangote Refinery, NNPC, and the lead arranger, AFREXIM Bank. Special recognition should also go to Prof. Benedict Oramah, President of the African Export-Import Bank (AFREXIM Bank), for this initiative, as these individuals work tirelessly behind the scenes to ensure that what we saw today actually occurred.
“Working with the Federal Ministry of Finance, Nigerian National Petroleum Corporation Limited, Central Bank of Nigeria, and other key agencies, AFREXIM leads the advisory work of structuring and arranging this initiative with the Associated Trade Finance Facility,” he stated. “This is one of the major directives of Mr. President and the Council in general.”
Additionally on Monday, the Federal Government assuaged concerns about potential non-compliance with the new minimum wage by stating that all pertinent parties were participating in the lengthy negotiations and consensus-building process that took place between early February and July 2024.
The most important thing is that this minimum wage has been passed and that all Nigerians were involved—all the stakeholders, the governors, the representatives of the local government, which is ARGON, and of course, the organised private sector and organised labour and the government itself—said Hon. Nkeiruka Onyejeocha, Minister of State for Labour and Employment, in response to reporters’ questions about what the government would do when people do not pay.
“It went through the process, became law, and was discussed. As responsible Nigerians, we want to assure Nigerians that we will follow through on our commitment to that.”
“I think that everyone will follow the agreement when there is cooperation, a strong leader, and the goodwill of the people they govern.”
Additionally, Onyejeocha declared that the federal government would honour its pledge to pay the adjusted salary retroactively until May 2024.
She said, “I believe that those things are still being considered because what I read was exactly what was agreed upon on October 2, 2023. I think that it is being considered.” The fact that the minimum wage has been signed, however, is what matters most.
President Tinubu has also questioned the purpose of the August 1 demonstration, pointing out that he is already taking care of the majority of the issues facing the country, especially those pertaining to the youth.
Mohammed Idris, the Minister of Information and National Orientation, disclosed that the proposed protest was discussed at Monday’s Federal Executive Council meeting.
According to Idris, the Federal government’s latest student loan program was designed with the youth in mind, ensuring that no Nigerian child who is admitted will be forced to leave out due to inability to pay fees.
The Minister stated that more sticks to be sold at reduced costs and truck loads of rice being distributed to state governments around the nation were all intended to lessen the suffering of the populace.
According to Idris, the President is a listening leader who won’t stand akimbo and let people suffer unfairly.
He stated that the Federal Election Commission (FEC) holds the position that the majority of the demands made by the protestors are being addressed by the federal government. As a result, the government believes that there is really no need for further protests because the government is already taking action on the majority of the demands made by the protestors.
This is a listening government, as we have stated time and time again. The message that the President has heard from everyone organising this demonstration is that it is not necessary.
Idris went on to say that the President was already lobbying on their behalf by pursuing the initiatives they wanted to see implemented, such as the government’s efforts to guarantee food availability.
He stated: “At the briefing at the most recent Council meeting, we declared that a specific number of trucks—20 in all—had been provided to the state governors for subsequent distribution to the most vulnerable members of society and those who genuinely require them. However, the government did not stop there.
Additionally, rice is being offered for almost half of its original price; a bag of rice is being sold right now. This rice is being sold at N40,000 at a number of centres that have been established throughout all of the Federation’s states. in order for those who require this rice to go there and purchase it for N40,000.
“In the beginning, each of these states has been given access to roughly ten trucks, and this is just the beginning. I am aware that some people have expressed the opinion that this is never enough.
“The government has not made the pretence that these supplies are sufficient. However, more of these interventions are being made in the interim, and they are important beginning steps. It goes without saying that, given the amount of money being invested in the agriculture industry, this is only a temporary solution.
“The monsoon season has arrived. As investments are being made in many of these federation states for irrigation projects in addition to traditional agricultural produce, we anticipate a decrease in the cost of food goods. Therefore, we anticipate that as time goes on, the cost of food and other necessities would naturally decrease.
These are some of the initiatives, and according to the President and the Federal Executive Council, some of the answers that the youth are seeking are already being offered, so some of them won’t protest right away. For instance, the federal government has only lately started to issue student loans. More than two million students currently have accommodations.
As of last week, just roughly 110,000 applications had been received; naturally, more will follow. Thus, sufficient resources are available for everyone who meets the requirements, has access to these loans, and has satisfied this requirement. Mr. President wants to ensure that no student or young person accepted into one of our postsecondary institutions is excluded because their guardian or parents are unable to cover their tuition.
Furthermore, though, there is the provision that these young people are receiving. We are aware of the efforts being undertaken to guarantee that the MTT program places roughly 3 million of them in employment. Additionally, there is the reduction that the general people is expected to experience by the time the federal government’s CNG effort reaches its full potential.
A portion of these buses have already been imported. A portion of the conversion kits are currently in stock. The conversion centres are starting to operate already. The main reason for the delays is that these items aren’t something you can simply grab off the shelf at the market. The procurement procedures must be followed first. It is anticipated that as we go from fossil fuel to renewable energy, the amount that individuals spend on transportation would decrease by more than 60%. Of course, you also need to order them.
The FEC also approved a number of agreements pertaining to the exchange of detainees between Nigeria and the Kingdom of Spain and the return of criminals who have escaped from justice.
The act, which will also be signed with other nations, will guarantee that no one can elude punishment, according to Lateef Fagbemi, Attorney General of the Federation and Minister of punishment.
“As you are all aware, there are three stages,” he said. The aspect of the investigation comes first. Making sure you serve your sentence as a deterrent and prosecuting the sentencing are the second and third things.
Previously, there have been instances of what are known as transboundary inhibitions, in which an individual who is wanted in Nigeria, for instance, travels outside the country’s borders in order to be apprehended.
If you require any document that is not contained here but you are aware of his contact information, how can we obtain this document?
Someone is attempting to elude punishment. How can you win him back once he’s been sentenced?
Certain nations have policies that allow convicted individuals to return home.
Thus, each of these three phases is being discussed. We’ll approach each nation separately. However, the ones pertaining to Nigeria, the Kingdom of Spain, and the Kingdom of Spain were the ones discussed today.
“Therefore, three of us quickly took memos, one of which dealt with information sharing and inquiry.
In June 2022, a deal was signed between us. Accordingly, following the agreement, you are required by law to return and have it ratified. Naturally, it was brought before Council today.Then, sitting chair president and our great leader led the way in getting it passed.
The second concerned the sharing of help to apprehend fugitives, or those attempting to elude prosecution.
Either you provide justice to them or you bring them to justice, then. Thus, the mutual assistance’s second feature has been approved.
The third in the series asks, “What do we do after being found guilty? Some will say, “Okay, can you bring the person back home to serve his sentence here if you have these convictions?” The same applies to anyone travelling from anywhere, particularly to a nation with which we have an agreement—in this case, Spain.
Okay. We have an arrangement that allows us to swap people serving sentences for one another here or elsewhere.
Thus, these have amply demonstrated that there is nowhere for criminals to hide. They may be confident that the law will catch them even if they venture outside the nation’s borders.
Thus, these are the three Ministry of Justice letters that the FEC deemed acceptable.
Additionally, the FEC approved the implementation of approximately N1,455,17,000,000 worth of road projects in various federation states.
Dave Umahi, the Minister of Works, made this announcement in light of the FEC’s July 10 mandate to halt some projects in order to conduct a review.
He claims that the council approved multiple other projects on Monday, despite the fact that some other projects were also shelved.
“The first one is the rehabilitation of Abeokuta-Iboro-Ilaro Road in Ogun state,” Umahi clarified. The FEC approved a contract worth N57 billion for Strabic Construction today.
The third segment of the road leading from Mubi to Maiduguri is the second. This is a NNPC project, and the contract is approved for a total of N89 billion. The contract is for MESSRS Decency Associates Limited, and it is currently under review and approval.
The Mubi to Maiduguri Section Two project was then approved as the third project today. Sections 1, 2, 3, and 4 tell the account of this. Part 1 is a work in progress. Then, no contractor received an award for section 2. Zephagold was given section 4 after section 3 is still in progress. However, the state governor of Borno claimed that he has already started working on section 4 and that the project is almost finished. He therefore asked that we return to Section 2, where the contract is not in effect.
Therefore, returning to Section 2 indicates that there would be ongoing projects along the whole length of Mubi. However, part 2 is also really poor. As a result, we had to buy it again on solid pavement. Thus, the move is authorised. The 42-kilometer relocation has been approved at the previously agreed contract cost. It isn’t the N67 billion that was added that the previous government kept.
“And last, there is Kano State’s Natalla-Buru. We reduced it in order to search for money. Funds are not available for it. We therefore resigned and are in contact with the National Assembly to see if they can provide us with funding.
The Benin-Akure-Ilesha Road, which is 150 kilometres by two, is the next one. We’re talking about 300 km here, and HiTech Construction was given contracts worth a total of N525 billion to use concrete pavements to complete the work. Thus, it has been accepted.
The third one is called Benin-Akure and was written by Ilesha. That is section 2, and HiTech Construction has been granted 66 kilometres of that. to be aware that as of September 2023, procurement for this project has been ongoing. It is included in the supplemental budget, but we were unable to provide it due to a lack of financing; however, we now have three funding stretches. That is the reason it is being presented.
For concrete technology, this 66-kilometer stretch is dualised for N286 billion in favour of HiTech Construction.
Angingali-Udobi-Udona-Umo-Uwana-Ubalaka is the upcoming project. And it is a review, and that is in the state of Imo. The NPC project, between N14 billion to N26.46 billion, is under assessment.
Next, Ojo-Odum-Okuku Road in Benue State has been withdrawn for evaluation and will reappear in the upcoming Federal Executive Conference.
The repair of Aba-Owerri Road, the NNPC depot motorway in Abia state, is another NNPC project that has been evaluated in favour of a Rudo Nigeria Limited project valued at N21 billion.
“CCECC is in charge of another project that we are working on from Odukpani Itu in Ikot-Ekpene, Cross Rivers State. We will probably combine all of the projects that this company has going around the nation, and we will work with them to decide on milestone completion and the amount of money they can contribute while we also agree on a payment schedule.
Because of the extremely poor terrain, the project’s budget has been revised from N50 billion to N79 billion. Additionally, we made the decision to pave the two carriage ways with reinforced concrete.
The CCECC is thus responsible for Enugu-Port Harcourt’s restoration. About four years ago, the project was initiated in the Port Harcourt axis. Currently, it is being directed towards Aba, and its original budget of N63 billion has been revised to N83 billion in favour of CCECC.
The Igomu Bridge is another project that was acquired and is in extremely bad shape—the bearings have disappeared. There is a concrete-to-concrete touch between you and the burned portion of the bridge. To repair it, we thus had to undertake a complete purchase. Additionally, Buildwell Nigeria Limited is favoured by a total of 19.87 billion.
“The Aba section of our project in Umuahia to Aba, which is being examined, was stepped down by Arab Contractors. However, the project is 85% finished.
Next, Julius Berger is working on the final stretch of the Ikot-Ekpene road from Akwa Ibom. The project is expected to cost between N54 billion to N90 billion, and reinforced concrete will be used for both procurement and construction.
Additionally, the Ore-Ondo-Akure Road is under special intervention owing to flooding. The road would require concrete because to its terrain, and CBC Nigeria Limited has a 24-month contract worth a total of N134 billion.
Finally, there is the Ofin-Oreta Road project in Lagos state, which is in favour of GRB and will cost N27.9 billion over the course of 18 months of construction. We only received consent for that today.