The Chief Executive Officer of the Dangote Refinery, David Bird, has raised concerns over a significant shortfall in crude oil allocations under the Federal Government’s Crude-for-Naira programme.
He revealed that the refinery is currently receiving only five cargos per month out of a pre-agreed 13 to 15.
Speaking during an interview on Arise Television on Wednesday, Bird clarified widespread misconceptions about the programme, stressing that the arrangement is not a subsidy or discounted crude supply scheme.
He explained that the initiative is designed to reduce foreign exchange pressures while supporting domestic refining.
Bird also highlighted operational challenges stemming from crude volume and grade mismatches, calling for greater transparency in allocation to ensure the programme delivers its intended benefits.
What the refinery is saying
Bird addressed misconceptions about the Crude-for-Naira programme and shared the refinery’s experience under the arrangement.
He emphasized that crude supplied is sold at full international benchmark prices, with no discounts.
- “Yes, we have been very vocal that there is an existing arrangement in place under the Crude-for-Naira programme, commonly misunderstood as a pricing regime. It is not. That is priced at full international benchmark crude oil pricing,” Bird said.
- “And our demand of the government is just to be transparent with that allocation methodology and be transparent because what we see under that agreement, we should be getting about 13 to 15 cargos a month.”
- “And that’s what we could process to meet the domestic fuel requirements of Nigeria. Currently, we’re only getting five.”
Bird stressed that the refinery pays all costs on commercial terms, including benchmark pricing, freight, insurance, and logistics, countering narratives of subsidy or preferential treatment.
Get up to speed
The Crude-for-Naira programme was launched by the Federal Government to enable domestic oil transactions in naira rather than dollars. The initiative aims to reduce pressure on Nigeria’s foreign exchange reserves, support domestic refining, and strengthen the country’s energy security.
Dangote Refinery, Africa’s largest refinery with a capacity of 650,000 barrels per day, was designed to process a wide variety of crude grades. Its operations are critical for meeting Nigeria’s domestic fuel needs and reducing import dependence. Over the past year, allocation shortfalls and grade mismatches have occasionally disrupted the refinery’s planned throughput.
More Insights
Under the arrangement, Dangote Refinery expects 13 to 15 cargos of crude monthly to operate at full capacity. Receiving only five cargos represents a significant underperformance, affecting domestic fuel output.
- “We don’t get the full allocation, and very often we don’t get the grades that we are highlighting as our preferences,” he noted.
- “Right now, we’re paying over $18 per barrel premium for those same Nigerian crude grades,” Bird disclosed, highlighting value leakage to international traders.
The refinery’s processing system is optimized for specific crude grades, and misalignment between supplied and preferred grades can reduce operational efficiency.
About 30 to 40 per cent of the refinery’s crude slate currently comes from international sources, illustrating its flexibility as a merchant refinery.
These operational pressures highlight the importance of clear and consistent allocation methodologies for domestic refining growth.
What you should know
Earlier, the refinery stated clarified that the facility purchases Nigerian crude at international benchmark prices, despite the Federal Government’s crude-for-naira initiative.
- The refinery had stated that it is ready to compete in Nigeria’s petroleum market under import-parity pricing, provided regulators ensure fair competition.
- It emphasized the need for equitable regulatory enforcement to sustain healthy competition in the downstream sector.
