The Federal Government has said that it cannot currently supply the Dangote Petroleum Refinery with the 700,000 barrels of crude oil it needs daily.
The Minister of Finance and Coordinating Minister of the Economy said this during a programme on Channels Television, following the Federal Government’s 30-day petrol discount offer through NNPC Retail.
According to him, the government does not have enough uncommitted crude after accounting for production costs, contractual obligations and previous commitments,
He noted that even though increased production and reduced oil theft had improved the country’s position, the government had yet to free enough crude to meet the refinery’s requirements.
“The reality is that today we do not have up to 700,000 free crude to give anyone, including Dangote,” Oyedele said.
He said Nigeria’s total crude oil production does not directly translate into barrels available to the government, as production-sharing contracts and joint ventures require allocating crude among partners.
The cost of extracting crude and royalty obligations must also be deducted before the remaining profit oil is shared.
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According to Oyedele, before President Bola Tinubu’s economic reforms began in May 2023, the Federal government had fewer than 100,000 barrels of uncommitted crude available through the Nigerian National Petroleum Company Limited (NNPC).
He stressed that the government had previously committed future crude production to borrowing arrangements to finance petrol subsidies, leaving limited supplies available for other uses.
“This is a gunpowder waiting to explode,” he said, describing the arrangement that existed before the reforms.
Oyedele said the government had since increased production, reduced oil theft and renegotiated some existing commitments to free up additional barrels.
He, however, said the country had yet to reach a position where it could supply Dangote’s full daily crude requirement.
He also cautioned that even if Nigeria had enough crude to supply the refinery, domestic crude grades would not necessarily meet all its processing needs.
“Nigerian crude is the sweet crude. It will not be the most optimal input for Dangote. Dangote needs to still import some heavy crude,” Oyedele said.
According to the minister, the naira-for-crude arrangement was introduced to improve stability but acknowledged that available volumes remained insufficient to meet all the refinery’s needs.
He expressed hope that higher production and the release of more crude from existing commitments would eventually allow Nigeria to supply the refinery fully.
The explanation comes amid debate over domestic crude supply to the Dangote refinery and the Federal Government’s recent petrol price intervention.
On the 30-day discount offer, which Pinnacle Daily had earlier reported on, Oyedele reiterated that the initiative was not a return to fuel subsidy, as NNPC Retail was funding the price reduction from its own retail margin rather than public funds.
He explained that the company buys petrol from Dangote Refinery at market prices, adds its operating costs and profit margin, and temporarily gives up the profit element to offer customers a discount.
The government directed NNPC Retail to limit the discount to its profit margin, prioritise public transport operators and run the offer for 30 days.
Oyedele maintained that the promotion could attract more customers to NNPC Retail and potentially increase sales volumes and dividends paid to the Federation Account, without creating a new government subsidy obligation.
Alex is a business journalist cum data enthusiast with the Pinnacle Daily. He can be reached via ealex@thepinnacleng.com, @ehime_alex on X