Nigeria’s bold initiative to price crude oil in naira for local refineries has faced considerable challenges merely two months after its introduction.
The strategy, championed by the Nigerian National Petroleum Company (NNPC), aimed to bolster the nation’s dollar reserves and guarantee an adequate crude supply for domestic refining.
Last month, the ministry of finance stated that the crude-for-aira deal had already started as planned on October 1, 2024.
However, the plan seems to be struggling, as key stakeholders, including the Dangote Oil Refinery, reportedly receive far less than initially pledged.
Edwin Devakumar, Executive Director of the Dangote Refinery, has revealed that the NNPC pledged to supply 385,000 barrels per day (bpd) to the refinery’s 650,000-bpd facility but has fallen short of even this reduced commitment.
Labelling the deliveries as “peanuts,” Devakumar underscored the difficulties of unreliable domestic supply chains.
At the same time, refineries affiliated with the Crude Oil Refinery-owners Association of Nigeria (CORAN) report being completely left out of the naira-based crude supply initiative, with ongoing negotiations with the government to address the issue.
As a result of these supply challenges, the Dangote Refinery has turned to the international market, recently securing 2 million barrels of U.S. WTI Midland crude.
According to Oilprice, while this underscores the refinery’s global competitiveness, it also highlights the inefficiencies in Nigeria’s domestic crude distribution system.
As Nigeria’s largest refinery approaches its target of achieving 85% operational capacity by year-end, its challenges highlight deeper systemic problems within the country’s energy sector.
Without a dependable crude supply, the aspiration for a self-sufficient refining industry—led by the Dangote refinery—risks becoming yet another unfulfilled dream in Nigeria’s complex oil economy.
Speaking on the matter, Wale Ogdei, an energy analyst, told TimesNow.com.ng that the initiative was bound to be affected by the country’s low oil production capacity.
Ogundeji said:
He added tat addressing these challenges requires robust infrastructure, transparent policies, and collaboration to stabilize the energy sector and boost local refining.
Meanwhile, TimesNow.com.ng had earlier reported that Smart Opeyemi, an independent petroleum marketer, had broken down why Nigerians may not buy petrol for cheaper prices anytime soon.
His assertion contradicts previous optimism about the impact that the Dangote Refinery’s operations will have on the price of petrol in Nigeria.
He stated that a reduction in the importation of petrol would create local jobs and bring other social and economic benefits.
Source: TimesNow.com.ng
