The Dangote Petroleum Refinery has raised concerns over the Federal Government’s failure to meet its crude oil supply obligations under the naira-for-crude initiative.
Devakumar Edwin, Vice President of Dangote Industries Limited, revealed that the Nigerian National Petroleum Company Limited (NNPCL) has not delivered the agreed minimum supply of 385,000 barrels per day (bpd), significantly impacting the refinery’s production capacity.
“We require 650,000 bpd. NNPCL committed to supplying at least 385,000 bpd but has failed to meet even that,” Edwin said in a report by *Reuters*.
The naira-for-crude initiative, introduced in July, was designed to ease foreign currency pressures by allowing local refineries to purchase crude oil in naira.
Despite this arrangement, industry sources disclosed that while four shipments of crude have been delivered to the Dangote refinery, additional supplies remain pending.
In response to the supply challenges, the refinery has turned to alternative sources, including imports from the United States.
Recently, it procured two million barrels of US WTI Midland crude, marking its first such purchase since August.
Operational Challenges
The $20 billion Dangote refinery in Lekki, which aims to rival European facilities, is operating below its maximum capacity of 425,000 bpd. It has set a target to reach 85% capacity by the end of the year.
Edwin described the crude deliveries from NNPCL as “peanuts,” highlighting the significant shortfall in meeting the refinery’s operational needs.
Broader Implications
Mathins Obaze, acting Executive Director of the Crude Oil Refinery-Owners Association of Nigeria, confirmed that Dangote is the sole refinery currently benefiting from the naira-for-crude deal out of the eight operational refineries in the country. However, most other members of the association have yet to access crude and are engaging with the government to address the issue.
NNPCL’s Focus
The reasons for the shortfall remain unclear, and both the NNPCL and the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) have declined to comment. Meanwhile, the NNPCL has shifted its focus to international markets, recently seeking customers for its new Utapate crude oil grade.
Dangote has called on the NUPRC to enforce regulations requiring oil producers to prioritize crude supply to local refineries.