The Dangote Petroleum Refinery has raised concerns over the Federal Government’s inability to meet its crude oil supply target under the naira-for-crude initiative.
In an interview reported by Reuters, the Vice President of Dangote Industries Limited, Devakumar Edwin, lamented that the Nigerian National Petroleum Company Limited (NNPCL) has consistently fallen short of delivering the agreed minimum of 385,000 barrels per day (bpd), a critical supply needed to sustain operations.
“We need 650,000 barrels per day. NNPCL agreed to give a minimum of 385,000 bpd, but they are not even delivering that,” Edwin said, describing the current supply as “peanuts.”
The initiative, introduced in July to address foreign exchange challenges, allows local refineries to purchase crude oil in naira.
It commenced in October with a plan to last six months, but less than two months in, the scheme appears to be faltering.
Four crude oil cargoes were reportedly delivered to the Dangote refinery last week, but sources say this volume remains insufficient.
Consequently, the $20bn Lekki-based plant, designed to process 650,000 bpd and compete with European refineries, has struggled to secure enough crude to operate optimally.
As a result of the shortfall, the refinery has turned to international markets.
On Wednesday, it purchased two million barrels of U.S. WTI Midland crude, marking its first purchase from the U.S. since August.
With a current capacity of 425,000 bpd and a year-end operational target of 85 per cent, the Dangote refinery’s reliance on foreign crude may intensify if local supply challenges persist.
The acting Executive Director of the Crude Oil Refinery-Owners Association of Nigeria, Mathins Obaze, revealed that Dangote is the only operational refinery out of eight in the country benefiting from the naira-denominated crude sale arrangement.
“Members are still unable to access crude in naira and are currently engaging the government for a resolution,” Obaze said.
Efforts by the Dangote refinery to address the shortfall included urging the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) in August to enforce rules compelling oil producers to prioritize local refineries. However, the NUPRC has yet to comment on the matter.
NNPCL, which is now seeking international buyers for its new Utapate crude oil grade, also did not respond to requests for comment on the reasons behind the shortfall.
The inability of NNPCL to fulfill its commitments under the naira-for-crude initiative not only threatens the Dangote refinery’s operations but also underscores broader challenges in Nigeria’s downstream oil sector.
Without immediate intervention, the nation’s goal of reducing dependence on imported refined products may remain out of reach.
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