NNPC ramps up crude supply to Dangote Refinery, but fuel price relief remains uncertain

The Dangote Petroleum Refinery received twice its usual crude oil allocation from the Nigerian National Petroleum Company Limited in March, raising hopes for improved fuel availability.

However, industry stakeholders caution that without government action on pricing, consumers may not experience relief at the pump.
Aliko Dangote, President of the Dangote Group, revealed in a Bloomberg report that the refinery took delivery of 10 crude oil cargoes from NNPC last month, compared to the average of about five cargoes monthly since late 2024.
Out of the 10 cargoes, six were paid for in naira, while four were settled in dollars under the current crude supply agreement between both parties.
Dangote explained that Nigeria increased crude supply to the refinery in March as part of efforts to enhance fuel availability following disruptions to global oil supply chains caused by tensions in the Middle East, particularly the US-Israel attack on Iran.
Industry operators have described the increased allocation as a positive development but stressed that meaningful reductions in fuel prices would depend on lowering the cost of crude supplied to domestic refineries.
Despite the improvement, Dangote noted that the refinery is still operating below its full capacity. According to him, the facility requires about 19 cargoes of crude monthly to function optimally—almost double the volume it received in March.
He added that although supply has improved, it remains insufficient, forcing the refinery to continue importing crude from the United States and other African countries to meet its needs.
A separate report had earlier indicated that NNPC allocated seven cargoes to the refinery for May loading, an increase from previous allocations of five cargoes. However, refinery officials said they were unaware of this development.
Dangote also expressed concerns over the practices of international oil companies operating in Nigeria, accusing them of prioritising sales to international traders instead of supplying the refinery directly. This situation, he said, compels the refinery to purchase Nigerian crude at higher prices.
According to him, the higher cost of crude inevitably leads to increased prices of petroleum products, as the refinery has to pass on the added expenses to consumers.
In addition to domestic supply, the refinery exported about 17 cargoes of petroleum products to other African countries in March, reinforcing its position as a major supplier across the continent amid ongoing global energy uncertainties.
The refinery is also expanding its production of polypropylene, a vital industrial material used in plastics and automotive manufacturing, which Dangote said is currently in short supply globally due to Middle East tensions.
The crude-for-naira agreement between NNPC and the Dangote refinery, signed in October 2024, was intended to boost local refining capacity, conserve foreign exchange, and stabilise fuel prices. However, its implementation has faced challenges due to inconsistent crude supply and competition from international traders.
Experts warn that the increased supply recorded in March may not automatically lead to lower pump prices. Jeremiah Olatide, CEO of Petroleumprice.ng, described the development as encouraging but pointed out that structural pricing challenges persist.
He stated that while the increase in crude supply suggests improved fuel availability, Nigerians may still struggle with affordability unless the Federal Government introduces a crude subsidy for local refineries.
Olatide further noted that even cargoes paid for in naira are priced using international benchmarks, meaning there may be no immediate drop in pump prices.
He also raised concerns about rising diesel costs, revealing that depot prices have already surpassed N2,000 per litre, signalling a potential crisis in the market.