By Our Reporter
There are growing concerns that the Naira-for-Crude initiative, which allows local refineries to receive crude oil in Naira and sell refined products to marketers in the local currency, could be jeopardized due to inadequate crude oil supply, according to Daily Trust findings.
President Bola Ahmed Tinubu had directed the sale of crude oil to Dangote Refinery in Naira as part of efforts to lower the cost of petrol. In October 2024, the Federal Executive Council (FEC) approved the sale of 450,000 barrels per day of crude oil for domestic consumption, to be traded in Naira, with Dangote Refinery serving as a pilot project.
The scheme, which began in the first week of October 2024, aimed to provide 385,000 barrels per day of crude oil to Dangote Refinery, located in Ibeju-Lekki, Lagos. However, findings indicate that the refinery has received consistently low allocations of crude oil, forcing it to turn to imports.
Official documents reviewed by our correspondent show that while Nigeria’s crude oil production has slightly risen to over 1.8 million barrels per day, the volume allocated to the Naira-for-Crude scheme has sharply declined. For February 2025, the scheme has been allocated just four cargoes, and for March, only two cargoes, totaling 950,000 barrels. This amounts to just 61,290 barrels per day, significantly below the scheme’s target of 385,000 barrels per day.
As a result, Dangote Refinery is set to import 12 million barrels of crude oil from the United States to meet its production goals. Meanwhile, the Nigerian National Petroleum Corporation (NNPC) and other marketers continue to import petroleum products, spending over N5 trillion on Premium Motor Spirit (PMS) and diesel (AGO) over a 110-day period.
An anonymous oil and gas expert expressed concern that the Naira-for-Crude initiative might be undermined, potentially hindering Nigeria’s energy security. The expert emphasized that paying for refined products in Naira is critical for stabilizing the Naira and reducing the country’s dependence on the US dollar, especially in the oil sector.
“The success of this initiative is a testament to the leadership of President Bola Tinubu and the Federal Executive Council, who have faced considerable opposition yet ensured its implementation. This initiative is crucial to Nigeria’s economic reforms and must not be derailed,” the expert said.
Reports from the Nigerian Ports Authority show that between October 1 and December 31, 2024, Nigeria imported 2.85 million metric tonnes of PMS and 791,619 metric tonnes of diesel. Between January 1 and 29, 2025, the country imported an additional 342,199 metric tonnes of PMS and 146,866 metric tonnes of AGO.
This has led to a staggering N4.02 trillion spent on petrol imports and over N1 trillion on diesel imports within just four months. Some believe this continued importation, despite Nigeria’s growing refining capacity, is designed to undermine local refineries like Dangote’s.
Dr. Ayodele Oni, an oil and gas expert, explained that although crude oil production has improved, forward sales agreements have made it challenging for NNPC to meet its commitments to local refineries. He also pointed to the impact of divestment by International Oil Companies (IOCs) as a key factor affecting local refining capacity.
A source at Dangote Refinery, speaking anonymously, explained that the refinery is committed to maintaining affordable prices for Nigerians, selling products to marketers in Naira, and absorbing logistics costs. The refinery is also working with partners to ensure uniform pricing nationwide.
Efforts to reach NNPCL spokesperson Mr. Olufemi Soneye for comment on the challenges of fulfilling obligations to local refineries were unsuccessful.