Bolatito Mercy
The Federal Government has said Nigeria currently lacks sufficient unallocated crude oil to meet the requirements of the Dangote Refinery and other domestic refineries, despite producing about 1.8 million barrels daily.
The Minister of Finance, Taiwo Oyedele, disclosed this on Friday during an appearance on Channels Television’s Politics Today, amid calls for a production subsidy to help domestic refineries meet local demand for petroleum products.
Oyedele explained that Nigeria’s total crude oil production cannot be treated as entirely available to the Federal Government because portions are allocated to investors under production-sharing contracts and joint ventures.
He said production costs and royalty obligations further reduce the volume available to the government before the remaining profit oil is shared.
According to the minister, Nigeria currently does not have up to 700,000 barrels of freely available crude oil to allocate to any buyer, including the Dangote Refinery.
He added that the refinery imports crude oil to supplement its supply, explaining that the country’s total production does not translate into sufficient crude available for allocation to domestic refiners.
Oyedele said the naira-for-crude arrangement introduced by President Bola Tinubu was designed to promote stability in the domestic petroleum market. However, he noted that limited crude availability remained a major challenge.
The minister expressed optimism that increased production would eventually enable Nigeria to supply the Dangote Refinery and other local refiners with sufficient crude oil.
He also said he hoped Nigeria would eventually refine all the crude oil it produces domestically and export only refined petroleum products.
His remarks come amid renewed calls for the restoration of fuel subsidies, with opposition figures proposing different measures, including production subsidies for domestic refineries.
On October 8, Oyedele announced a 30-day petrol discount at Nigerian National Petroleum Company Limited (NNPC) retail stations as part of measures to ease the impact of rising fuel prices.
The Federal Government subsequently explained that NNPC Retail would forgo its retail profit margin during the period to provide relief to consumers. The government maintained that the initiative was not a restoration of the former petrol subsidy.
The announcement nevertheless attracted criticism from opposition politicians and members of the public, some of whom questioned whether the measure amounted to a return of fuel subsidy through another arrangement.
President Bola Tinubu introduced major economic reforms after assuming office in 2023, including removing the longstanding petrol subsidy and adopting a floating exchange rate for the naira.
Although the reforms have received support from some economists, they have also contributed to increased living costs and financial pressure on households across Nigeria.
The removal of the petrol subsidy has affected transportation costs and the prices of food and other essential goods, as higher fuel costs have increased expenses for businesses and distributors.
Tinubu has maintained that the reforms were necessary to prevent a deeper economic crisis, arguing that the former subsidy arrangement had become financially unsustainable.
Nigeria, Africa’s leading oil producer, is also home to the Dangote Petroleum Refinery, owned by billionaire industrialist Aliko Dangote.
Petrol prices have reportedly risen to around ₦1,400 per litre in some locations amid higher international oil prices and the impact of the conflict in the Middle East. On October 9, reports indicated that prices at NNPC retail stations were approximately ₦1,355 per litre in Lagos and Rivers and ₦1,370 in Abuja. Prices vary by location and filling station.
