KEY POINTS
- Dangote Refinery says it receives only five crude cargos monthly instead of 13 to 15 under crude-for-naira deal
- CEO says crude is sold at full international prices and calls for transparency in allocation methodology
- Shortfall and grade mismatch may reduce refinery output and affect Nigeria’s domestic fuel supply
The Dangote Refinery has raised concerns over a major shortfall in crude oil allocations under the Federal Government’s crude-for-naira programme, revealing that it is receiving far fewer shipments than initially agreed.
Chief Executive Officer of the refinery, David Bird, disclosed that the facility is currently receiving only five crude cargos per month instead of the expected 13 to 15 cargos under the arrangement. He spoke during an interview on Arise Television, where he clarified misconceptions surrounding the crude-for-naira initiative.
Bird stressed that the programme is not a subsidy or discounted crude supply scheme, but rather a mechanism designed to reduce pressure on foreign exchange demand while supporting domestic refining. He noted that crude supplied to the refinery is priced at full international benchmark rates.
According to Bird, the refinery’s demand is for transparency in how crude allocations are determined, especially since the volumes currently supplied fall significantly below operational requirements.
He explained that the refinery pays for crude on full commercial terms, including benchmark pricing, freight, insurance, and logistics costs. This, he said, counters claims that the refinery receives preferential pricing or subsidy support under the arrangement.
Bird stated that the agreed allocation of 13 to 15 cargos per month would enable the refinery to process enough crude to meet Nigeria’s domestic fuel needs. However, receiving only five cargos has limited throughput and affected output planning.
He also highlighted concerns over crude grade mismatches, noting that the refinery often does not receive preferred grades required for optimal processing. The mismatch, he said, affects operational efficiency and increases reliance on alternative sources.
Operational pressure grows amid crude shortfall
Bird disclosed that the refinery is currently paying more than 18 dollars per barrel premium for Nigerian crude grades sourced through international traders. This, he noted, reflects value leakage and undermines the objectives of the crude-for-naira arrangement.
He added that about 30 to 40 percent of the refinery’s crude slate is currently sourced internationally, underscoring the facility’s flexibility as a merchant refinery. However, this also increases exposure to foreign exchange and logistics costs.
The refinery’s processing system is designed to handle a wide range of crude grades, but efficiency improves when preferred grades are supplied consistently. The shortfall in both volume and grade alignment has therefore created operational challenges for the facility.
The crude-for-naira programme was introduced by the Federal Government to enable domestic crude transactions in naira rather than dollars. The initiative is aimed at easing pressure on foreign exchange reserves, strengthening energy security, and supporting local refining capacity.
Dangote Refinery, Africa’s largest with a capacity of 650,000 barrels per day, plays a critical role in Nigeria’s strategy to reduce fuel imports. The facility was designed to meet domestic demand and support export potential once fully operational.
Under the crude-for-naira arrangement, consistent supply of 13 to 15 cargos monthly is required for optimal production. Receiving only five cargos represents a significant gap that could affect domestic fuel availability.
The refinery reiterated that it purchases Nigerian crude at international benchmark prices and is prepared to compete in the domestic petroleum market under import-parity pricing. However, it emphasised the need for fair allocation and equitable regulatory enforcement to ensure sustainable competition in the downstream sector.
Industry observers say resolving allocation inconsistencies and ensuring transparent supply mechanisms will be critical to maximising domestic refining capacity and reducing Nigeria’s dependence on imported petroleum products.
