The Dangote Refinery in Lagos has received a boost following a directive from President Tinubu mandating the Nigerian National Petroleum Company Limited (NNPCL) to provide crude oil to Nigerian refineries, including Dangote’s, with payments conducted in naira. This decision was approved during a Federal Executive Council (FEC) meeting to stabilize the naira-dollar exchange rate and address rising fuel costs.
Bayo Onanuga, President Tinubu’s Special Adviser on Information and Strategy, disclosed on social media that Dangote Refinery requires 15 cargoes of crude annually, valued at $13.5 billion. Currently, NNPCL has committed to supplying four of these. The remaining 450,000 barrels per day, previously allocated for domestic consumption, will now be offered to local refineries in naira, starting with Dangote as a pilot. The exchange rate will remain fixed throughout the transaction period.
Afreximbank and other Nigerian financial institutions will facilitate the agreements between Dangote Refinery and NNPCL, eliminating the need for international letters of credit. Onanuga highlighted that this policy would save billions of dollars spent on fuel imports while enhancing local energy security.
Dangote Refinery, a massive 650,000 barrels-per-day facility and Africa’s largest, began operations in early 2024. By April, it introduced products like diesel and aviation fuel to the market, significantly reducing their prices. Diesel dropped from ₦1,450 to ₦940 per liter, while Jet A1 decreased to ₦980.
Previously, the refinery faced challenges in sourcing crude oil locally, leading to disputes with the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA). These issues forced the refinery to import crude from the United States and Brazil while exploring options in Libya and Angola. “If we can secure crude oil domestically, there will be no need to look elsewhere,” said Dangote.
Industry groups like the Crude Oil Refineries Association of Nigeria (CORAN) have advocated for prioritizing local refineries in crude oil allocation to ensure energy independence. Momoh Oyarekhua, Chairman of OPAC Refinery, emphasized that such policies would stabilize the naira and strengthen Nigeria’s energy sector.
Nigeria currently spends approximately ₦4 trillion quarterly on petroleum imports due to the inactivity of its three state-owned refineries. The new directive aims to reduce this dependency while providing economic relief.
Modular refineries, such as the Edo Refinery (ERPC) and Duport Midstream in Edo State, have already been producing refined products, including diesel and naphtha. Larger facilities, such as the Warri, Kaduna, and Port Harcourt refineries, are expected to benefit from this policy shift as they resume operations.
This move is poised to transform Nigeria’s energy landscape, easing pressure on the naira and fostering self-reliance in the petroleum sector.
