*There are concerns the Nigerian Government’s lofty Naira-for-Crude initiative may be threatened due to inadequate crude supply to domestic refiners, as experts have warned the initiative may be undermined, and threaten the potential for improving energy security in the country

Isola Moses | 绿帽献妻

There are concerns that the Nigerian Government’s Naira-for-Crude initiative, which ensures local refineries receive crude oil in the local currency and sell refined petroleum products to marketers in the Naira, may be threatened over inadequate crude supply to domestic refiners.

It is recalled that President Bola Ahmed Tinubu had directed the sale of crude oil to Dangote Petroleum Refinery in Naira as part of move to reduce the cost of Premium Motor Spirit (PMS), otherwise known as petrol.

Nigeria’s Federal Executive Council (FEC), in Abuja, FCT, October 2024, approved that 450,000 barrels intended for domestic consumption be offered in Naira to local refineries, with the Dangote Refinery acting as a pilot project.

Under the scheme which commenced in the first week of October 2024, the NNPCL was expected to supply 385,000 barrels of crude oil to the 650,000 barrel-per-day (bpd) Dangote Refinery located, in Ibeju-Lekki, Lagos.

However, findings showed that there has been a consistent low supply of allocations to Dangote Refinery, forcing it to resort to importation, reports said.

Official documents on the project equally indicated that while Nigeria鈥檚 crude oil production has marginally increased, exceeding 1.8mbpd, but there has been a sharp decline in the volume of crude allocated to the Naira-for-Crude scheme, Daily Trust report said.

The document revealed that for February 2025, the scheme is allocated only four cargoes, and for March, two cargoes, totalling 950,000 barrels (1.9 million barrels for the month).

This represents an allocation of 61,290 barrels per day 鈥� far below the 385,000 bpd target under the scheme.

绿帽献妻 reports the Dangote Petroleum Refinery has disclosed the facility is set to receive 12 million barrels of crude oil from the United States (US), citing local supply constraints that have hindered its bid to attain full refining capacity of 650,000 bpd.

Amid this challenge, it was learnt that the Nigerian National Petroleum Company (NNPC) Limited, and allied oil marketers have continued to import petroleum products into the country.

Such fuel importations into Nigeria have gulped over N5 trillion, especially on importing Premium Motor Spirit (PMS) and diesel (AGO) within 110 days, according to report.

An unnamed oil and gas expert in the public sector warned that the Naira-for-Crude initiative might be undermined and threatened the potential for improving energy security in Nigeria.

The source emphasised that these products, paid for entirely in Naira, are crucial to the government鈥檚 efforts to stabilise and strengthen the currency.

鈥淭he refineries pay fully for these products at international rates, but in Naira.

“The Dangote Petroleum Refinery and other domestic refineries then sell to marketers in Naira, thus eliminating currency or forex risks and reducing reliance on the dollar for domestic transactions.

“By aligning domestic transactions with Naira payments, the government is effectively reducing Nigeria鈥檚 dependency on the US Dollar, particularly in the oil sector, where a large portion of Nigeria鈥檚 foreign reserves has traditionally been spent on oil imports,鈥� he explained.

The source also 鈥渦ndoubtedly, its success is a testament to the visionary leadership of President Bola Tinubu and the Federal Executive Council, who, despite persistent opposition, have ensured its successful implementation.

He stated: “This initiative, which is critical to Nigeria鈥檚 ongoing economic reforms, must not be derailed.鈥�

Importation continues despite local refineries

According to the motor tanker vessels report from the Nigerian Ports Authority, a total of 2,846,499.41 metric tonnes of PMS and 791,619.00 metric tonnes of diesel were imported between October 1 and December 31, 2024.

Besides, a total of 342,199mts of PMS and 146,866mts of AGO were imported into the country between January 1 and 29, 2025.

This equates to the importation of over four billion (4,276,044,567.81) litres of PMS and over one billion (1,103,658,360) litres of diesel within 121 days, using a conversion factor of 1,341 litres per metric tonne for PMS and 1,176 litres per metric tonne for AGO.

At an average landing cost of N940 per litre for PMS and N920 per litre for AGO, Nigeria has spent over four trillion Naira (N4.019 trillion) importing petrol and over one trillion Naira (N1.015 trillion) on diesel imports during the period.

It is equally noted that the continued importation despite the huge local refining capacity is targeted at crippling local refineries, especially the Dangote Petroleum Refinery, another source reportedly said.

Dr. Ayodele Oni, an oil and gas expert, noted that despite improved crude oil production, the forward sale arrangements have made it difficult for the NNPCL to fulfill obligations to the local refiners.

Oni stated that the divestment by the International Oil Companies (IOCs) is also responsible for the challenge.

He said there must be improved production to sustain the Naira-for-crude scheme.

The industry expert, however, stated it is strange that Nigeria continues to import so much fuel despite the increased refining capacity through Dangote Refinery, Aradel, and the recently revived government-owned refineries.

A source at the Dangote Refinery, who solicited anonymity, also explained that in line with its commitment to serving Nigerian consumers and keeping prices affordable, the refinery continues to sell products to marketers in Naira. Dangote also continues to absorb costs of logistics to ensure uniform pricing across the country.

The source further noted: “The Refinery generously assumes equalisation status, which only the government does undertake.

“This has been met with enthusiasm by our partners, such as MRS, Heyden, and Ardova.

“The Petroleum Products Retail Outlet Owners’ Association has entered into an agreement with the refinery to distribute its PMS nationwide at a uniform price across all its filling stations.”

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