The Dangote Petroleum Refinery has expressed dissatisfaction with the Federal Government’s failure to meet its crude oil supply target under the naira-for-crude initiative.
According to Dangote Industries Limited’s Vice President, Devakumar Edwin, the volume of crude oil supplied by the Nigerian National Petroleum Company Limited falls significantly short of the refinery’s operational needs.
Edwin, in an interview with Reuters, revealed that since the program began in October, the NNPCL has failed to deliver the promised minimum of 385,000 barrels per day.
He described the deliveries as “peanuts” compared to the refinery’s requirement of 650,000 bpd to achieve optimal production capacity.
“We need 650,000 barrels per day. NNPCL agreed to give a minimum of 385,000 bpd, but they are not even delivering that,” the Dangote official said.
The naira-for-crude initiative, introduced by the government in July, was aimed at addressing the nation’s foreign currency challenges.
Under the program, crude oil is sold to local refineries in exchange for payment in naira. However, sources disclosed that only four cargoes of crude oil have so far been delivered to the Dangote Refinery.
Despite these deliveries, the volume is inadequate for sustained operations, forcing the refinery to turn to international markets for supplementary supplies.
To fill the gap, Dangote Refinery recently purchased two million barrels of U.S. West Texas Intermediate Midland crude, marking its second purchase from the U.S. this year, with the first occurring in August.
The $20 billion refinery, situated in Lekki, Lagos, has a current operational capacity of 425,000 bpd and aims to reach 85% operational efficiency by year-end.
It was designed to compete with European refiners when running at full capacity but remains hindered by inconsistent crude supplies.
Adding to the challenge, other refineries in Nigeria have reportedly been excluded from the naira-denominated crude sale deal.
Acting Executive Director of the Crude Oil Refinery-Owners Association of Nigeria, Mathins Obaze, confirmed that Dangote Refinery is the sole beneficiary of the arrangement among the eight operational refineries in the country.
Obaze disclosed that other members of the association are still in negotiations with the government to access crude under the program.
“Members are still unable to access crude in naira and are currently engaging the government for a resolution,” Obaze said.
In response to the crude supply issues, Dangote Refinery had earlier urged the Nigerian Upstream Petroleum Regulatory Commission to enforce regulations mandating oil producers to prioritize local refineries in their crude allocations.
However, NUPRC has not commented on the matter. Similarly, NNPCL did not respond to inquiries regarding the shortfall in deliveries under the initiative.
Meanwhile, NNPCL appears to be focusing on expanding its crude oil market overseas.
The company was recently in London, seeking buyers for its new Utapate crude grade as part of its international marketing efforts.
This development underscores the ongoing struggle to balance local refinery needs with export ambitions, casting doubt on the feasibility of the naira-for-crude program in its current form.
