The Dangote Petroleum Refinery has revealed that the Federal Government has not met its crude oil supply targets under the naira-for-crude initiative.
According to the Vice President of Dangote Industries Limited, Devakumar Edwin, the crude received from the Nigerian National Petroleum Company Limited so far is insufficient compared to the refinery’s requirements to boost refined product output.
Speaking, Edwin stated that NNPCL has failed to meet its commitment to deliver a minimum of 385,000 barrels per day (bpd) since the initiative began in October, according to Reuters.
The supply shortfall hampers the refinery’s capacity to achieve optimal production levels.
“We need 650,000 barrels per day. NNPCL agreed to give a minimum of 385,000 bpd, but they are not even delivering that,” the Dangote official said.
In July, the Nigerian government announced a plan to tackle challenges in accessing foreign currency by selling crude oil priced in naira to local refineries. The initiative, intended to run for an initial six months starting in October, aimed to reduce reliance on foreign exchange for crude purchases while boosting local refining capacity.
Last month, it was reported that four cargoes of crude oil had been delivered to the Dangote Petroleum Refinery under the naira-for-crude initiative. However, sources familiar with the local crude sale arrangement indicated that the refinery is still awaiting additional deliveries to meet its operational needs.
Less than two months into the program, the initiative appears to be struggling, prompting the refinery to explore crude purchases from the United States to sustain its refining operations.
The $20 billion Dangote Petroleum Refinery, is designed to compete with European refiners when operating at full capacity.
However, it has faced significant challenges in securing sufficient crude oil supplies to run optimally.
Confirming this situation, the acting Executive Director of the Crude Oil Refinery-Owners Association of Nigeria, Mathins Obaze, said Dangote remains the only recipient out of eight operational refineries in Nigeria to have benefited from the naira-denominated crude sale arrangement.
“Members are still unable to access crude in naira and are currently engaging the government for a resolution,” Obaze said.
The reason for the crude oil supply shortfall to the Dangote Petroleum Refinery remains unclear, as the NNPCL has not responded to requests for comment.
In August, the refinery called on the Nigerian Upstream Petroleum Regulatory Commission to enforce regulations requiring oil producers to supply local refineries with crude.
However, the NUPRC has also remained silent on the issue, leaving the enforcement and resolution of the matter uncertain.