The Chief Executive Officer of the Dangote Refinery, David Bird, has called for greater transparency in Nigeria’s crude oil allocation system, warning that supply shortfalls are forcing the refinery to buy Nigerian crude at higher international premiums.

Speaking in an interview with ARISE NEWS on Wednesday, Bird said the refinery is currently operating at its full processing capacity of 650,000 barrels per day, sufficient to meet both Nigeria’s domestic fuel demand and regional supply needs. However, he stressed that inadequate and inconsistent crude supply remains a major challenge.

“That’s correct. We’re at capacity processing 650,000 barrels a day, meaning not only Nigeria’s domestic fuel requirements but also the region,” he said.

On government support, Bird explained that the refinery operates under the Crude-for-Naira programme, which he clarified is often misunderstood.

“It is priced at full international benchmark crude oil pricing, however without a foreign exchange implication. It has been very successful in stabilising the effects… but it is not a discount or a subsidy,” he stated.

Despite this framework, Bird revealed that the refinery is receiving significantly less crude than agreed under the arrangement.

“We should be getting about 13 to 15 cargoes a month… currently we’re only getting five. So that’s an underperformance against that pre-agreed volume contract,” he said.

He also raised concerns about crude quality mismatches, noting that the refinery often does not receive its preferred grades despite submitting specifications.

“Our hardware is designed around a certain crude slate… not only do we not get the full allocation, very often we don’t get the grades that we are highlighting as our preferences,” Bird added.

As a result, the refinery is forced to source Nigerian crude from the international market—often at a steep premium.

“We’re now paying over $18 per barrel premium for those same Nigerian crude grades… that value is money that Nigeria is leaking to the international trading community,” he said.

Bird noted that about 30–35% of the refinery’s crude comes via the Crude-for-Naira programme, while an additional 30–40% is sourced internationally, underscoring the facility’s flexibility as a merchant refinery.

On fuel pricing, Bird said the refinery is fully exposed to global market forces and operates without subsidies, making it vulnerable to fluctuations driven by geopolitical tensions.

“We try and maintain some stability within a commercially acceptable range… but all our cost inputs—from crude to freight and insurance—are impacted,” he explained.

He acknowledged the burden on consumers, describing the current situation as a broader cost-of-living crisis.

“This is a cost-of-living crisis… every facet of the modern economy is impacted by energy,” Bird said, adding that even if global conflicts ended immediately, supply chain disruptions would persist for months.

Looking ahead, Bird urged Nigerian authorities to rethink broader cost structures and regulatory pressures affecting the industry.

“I think there’s an opportunity for the government to take an all-encompassing view… not just crude price, but the cost of doing business in Nigeria,” he said.

He also emphasised the importance of long-term planning, including building strategic reserves.

“Government and industry must think the unthinkable… COVID should have woken us up about the vulnerability of global supply chains,” he noted.

Clarifying the purpose of the Crude-for-Naira policy, Bird stressed that it is designed to stabilise Nigeria’s foreign exchange, not to subsidise the refinery.

“It was not put in place to benefit Dangote Refinery… it is purely a currency mechanism to bring stability,” he said.

On the refinery’s future, Bird disclosed plans for a public listing, describing it as an inclusive opportunity.

“This is the people’s IPO… we want it to be one of the most widely subscribed IPOs in the world,” he added.

Bird concluded by reiterating the cyclical nature of the oil market and the need for operational efficiency.

“What goes up always comes down… our job is to be cost-effective, disciplined and resilient through the cycle,” he said. (Arise News)

Update news