Nigeria’s push for energy independence has suffered a major setback as Dangote Petroleum Refinery and several modular refineries prepare to import about 122.4 million barrels of crude oil over the next six months. This will cost around $8.56 billion, or $1.43 billion per month, following the failure of the naira-for-crude policy and ongoing uncertainty over the government’s Domestic Crude Supply Obligation.
Why Dangote Is Turning to Imports
The collapse of negotiations between the Nigerian National Petroleum Company Limited (NNPCL) and Dangote Refinery has left local refiners struggling to get crude oil. A key meeting scheduled for Monday between government officials, the Technical Sub-Committee on the Naira-for-Crude Policy, and Dangote representatives was postponed. Insiders say the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) was not ready with its recommendations.
“The NUPRC is still working on the task assigned to it, so the meeting couldn’t hold,” a senior government official said. With no clear timeline for resolution, refiners have no choice but to turn to costly imports.
How Much Will This Cost?
Due to the crude supply crisis, Dangote Refinery has already started importing oil, bringing in 654,766 metric tonnes in just three days. The Edo Refinery, a smaller 30,000-barrel-per-day plant, is also negotiating with a U.S.-based crude supplier.
Together, Dangote and Edo require about 680,000 barrels of crude daily about 20.4 million barrels each month. At an average price of $70 per barrel, the total cost for six months could reach $8.56 billion, highlighting Nigeria’s heavy reliance on external crude despite being Africa’s top oil producer.
Eche Idoko, spokesperson for the Crude Oil Refinery owners Association of Nigeria (CORAN), described the situation as a “major setback.” He said, “Local refiners are now forced to look abroad for crude oil because the government has not delivered on its supply commitments.”
Why the Naira-for-Crude Policy Failed
The naira-for-crude policy was meant to allow refiners to buy oil using the local currency instead of dollars, reducing Nigeria’s reliance on foreign exchange. However, the plan collapsed because refiners were selling fuel in naira but still had to buy crude in dollars.
Dangote Refinery recently announced a temporary halt to naira-based fuel sales, saying, “We have sold more fuel in naira than the amount of naira-denominated crude we have received. We need to adjust our pricing to match our crude oil costs, which are still in U.S. dollars.”
NNPCL’s obligations to foreign creditors have also worsened the situation. The company has already committed about 8.17 million barrels of crude per month to repay loans and a separate $9.5 billion oil sales deal, leaving little supply for local refineries.
Rising Fuel Prices and Economic Fallout
As refiners switch to imports, fuel prices have started rising. In Abuja and Lagos, some filling stations have increased petrol prices to N940 per litre, up from N880 last week. Loading depot data shows price hikes of N10 to N14 per litre due to the higher cost of imported crude.
Industry experts warn that this crisis could hurt the government politically and economically. “Anyone blocking crude supply to local refineries is working against this administration,” said Idoko. He added that the way Dangote and other investors are treated could become a major issue in the 2027 elections.
What’s Next for Nigeria’s Refineries?
With modular refineries like Walter Smith, Aradel, and Duport struggling, and others like Clairgold and Azikel still under construction, the future of Nigeria’s refining sector remains uncertain. The postponement of Monday’s meeting has only added to the confusion, with no clear solutions in sight.
For now, Dangote and other refiners have no choice but to rely on imported crude an ironic situation for a country with 37.5 billion barrels of oil reserves. As Nigerians brace for higher fuel prices, the government faces mounting pressure to fix the crisis and prevent further economic strain.
