Naira-for-Crude Scheme Faces Setback as Local Refineries Struggle with Low Supply


Nigeria’s ambitious Naira-for-Crude initiative, designed to supply local refineries with crude oil in Naira while ensuring refined petroleum products are sold in the same currency, is facing serious challenges due to inadequate crude supply, findings have revealed.

The scheme, championed by President Bola Ahmed Tinubu, was introduced to curb forex dependency and reduce the cost of Premium Motor Spirit (PMS), commonly known as petrol. 

In October 2024, the Federal Executive Council (FEC) approved 450,000 barrels for domestic consumption, with the Dangote Refinery serving as a pilot project. 

However, the initiative has struggled to meet its supply targets.


Dangote Refinery Faces Crude Shortfall


Under the plan, the Nigerian National Petroleum Corporation Limited (NNPCL) was expected to deliver 385,000 barrels per day (bpd) to the 650,000 bpd-capacity Dangote Refinery in Lagos. 

But, reports indicate that actual allocations have been significantly lower, forcing the refinery to rely on imported crude.

Official documents show that for February 2025, the scheme was allocated only four cargoes, and for March, just two—amounting to a total of 1.9 million barrels for the two months. 

This translates to an average of 61,290 bpd, far below the scheme’s intended target. 

As a result, Dangote Refinery has turned to alternative sources, recently securing 12 million barrels of crude oil from the United States to maintain operations.


Government Still Spending Trillions on Fuel Imports


Despite Nigeria’s increased refining capacity through Dangote Refinery, Aradel, and recently revived state-owned refineries, the country continues to import vast amounts of petroleum products.

According to data from the Nigerian Ports Authority, between October 2024 and January 2025, Nigeria imported over 4.2 billion litres of PMS and more than 1.1 billion litres of diesel. 

This has cost the country over N5 trillion in just four months—N4.019 trillion on petrol and N1.015 trillion on diesel imports—at average landing costs of N940 per litre for PMS and N920 per litre for diesel.

A public sector oil and gas expert, who spoke anonymously, warned that the Naira-for-Crude scheme could be undermined if crude supply issues persist. 

He emphasized that the initiative is vital for strengthening the Naira and stabilizing the economy, as local refineries pay for crude at international rates but in local currency.


Experts Urge Government Action


Energy expert, Dr Ayodele Oni noted that while Nigeria’s crude production has slightly increased beyond 1.8 million barrels per day (mbpd), forward sale agreements and divestments by International Oil Companies (IOCs) have made it difficult for the NNPCL to meet its domestic commitments. 

He stressed that sustained production growth is crucial for the success of the Naira-for-Crude policy.

Meanwhile, a source at Dangote Refinery revealed that the company continues to sell petroleum products to local marketers in Naira, even absorbing logistics costs to maintain a uniform price nationwide. 

“We are committed to keeping prices affordable for Nigerians, despite the challenges,” the source said.

Efforts to reach NNPCL’s Chief Spokesperson, Mr. Olufemi Soneye, for comments on the crude supply shortfall were unsuccessful. 

Calls and messages to his phone went unanswered as of the time of filing this report.

With rising concerns over the viability of the Naira-for-Crude scheme, industry stakeholders are urging the government to prioritize crude allocations for local refineries and reduce reliance on expensive fuel imports. 

If unresolved, the ongoing supply crisis could derail the policy’s goal of enhancing energy security and economic stability in Nigeria.

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