Crude shortages threatening domestic fuel output have been highlighted by the CEO of Dangote Refinery, David Bird. The refinery is currently receiving only five cargos per month under the Federal Government's Crude-for-Naira initiative, significantly below the pre-agreed 13 to 15 cargos needed to operate at full capacity.
This substantial shortfall has raised concerns about the potential implications for domestic fuel supply. Bird clarified that the Crude-for-Naira programme is not a subsidy or discounted crude supply scheme, but rather a programme designed to reduce foreign exchange pressures while supporting domestic refining.
According to Bird, the refinery pays all costs on commercial terms, including benchmark pricing, freight, insurance, and logistics. However, he highlighted challenges arising from crude volume and grade mismatches, noting that misaligned allocations affect operational efficiency. The refinery currently sources about 30 to 40 percent of its crude slate internationally, demonstrating flexibility as a merchant refinery.
Bird warned of value leakage to international traders due to the premium paid for Nigerian crude grades. He emphasized that consistent allocation of Nigerian crude is essential for optimising throughput and achieving the programme's intended objectives.
Energy analysts have expressed concerns that the crude allocation shortfall could affect domestic fuel supply and undermine investor confidence in Nigeria's refining sector.
The Crude-for-Naira programme's failure to deliver on its promises is a stark reminder of the government's inability to manage the country's oil resources effectively. David Bird's warnings about the potential impact on domestic fuel supply and investor confidence are particularly concerning. The programme's design, which aims to reduce foreign exchange pressures while supporting domestic refining, is laudable, but its implementation has been marred by inefficiencies. The consequences of this shortfall will be felt by everyday Nigerians, who will bear the brunt of reduced fuel supply and increased prices. The government must take immediate action to address these operational challenges and ensure consistent allocation of Nigerian crude to the refinery.
