CEO David Bird says crude-for-naira policy is not a discount for Dangote Refinery but rather targets Nigeria’s currency stability
The Chief Executive Officer of Dangote Refinery, David Bird, has said the Federal Government’s crude for naira policy was designed to stabilise Nigeria’s foreign exchange market rather than provide financial advantages to the refinery.
Nigeria’s Minister of Finance, Wale Edun, had announced that the naira for crude sale agreement officially took effect from October 1, 2024, describing it as a strategic move approved by the Federal Executive Council to boost local currency usage in the oil sector and strengthen economic stability.
Despite expectations from petroleum marketers and industry analysts that the policy could ease currency pressures and reduce fuel pump prices, uncertainty has persisted regarding its operational impact.
Speaking during an interview on Wednesday, Bird stressed that the programme has been widely misunderstood, noting that the refinery still purchases crude oil at full international benchmark prices.
He explained that the initiative was intended to support currency resilience by enabling domestic crude transactions in local currency rather than US dollars.
“Just to start on the crude for Naira, crude for Naira is not there to benefit Dangote Refinery. That is a fundamental misunderstanding. The crude for Naira programme is to provide resilience to foreign exchange. It is the benefit of the country to process domestic crude in the domestic currency.”
Bird added that while the policy has helped stabilise foreign exchange pressures, the refinery has continued to face challenges relating to crude supply volumes and quality allocations under the arrangement.
He also noted that the refinery has had to source preferred Nigerian crude grades from the international market at significant premiums due to allocation gaps.
“What we see under that agreement, we should be getting about 13 to 15 cargoes a month. And that’s what we could process to meet the domestic fuel requirements of Nigeria. Currently, we’re only getting five. So, that’s an underperformance against that pre-agreed volume contract.”
“And that value between the purchase price and the premium that we’re now seeing is money that Nigeria is leaking to the international trading community.”
The Dangote Refinery CEO said the plant is currently operating at full installed capacity of 650,000 barrels per day, meeting domestic fuel needs while also supplying regional markets.
“We’re at capacity processing full 650,000 barrels a day, meeting not only Nigeria’s domestic fuel requirements, but also the region.”
Bird said global oil market disruptions linked to tensions in the Middle East have increased operating costs across the refinery’s value chain, including freight, insurance and equipment transport expenses.
“So, we are seeing this price impact throughout the entire economy. Our view on pricing is that we try and maintain stability within a commercially acceptable range because there is no subsidy or discount applied to our cost inputs.”
He stated that fuel pricing decisions are influenced by the refinery’s exposure to international market dynamics, noting that the business operates without subsidies or discounts on crude inputs.
“From a price perspective, we are fully exposed to the international market when it comes to both refining sorry crude supply and also product pricing.”
On Nigeria’s broader energy outlook, Bird said the country remains strategically positioned due to its crude reserves and growing domestic refining capacity, particularly at a time when many industrialised economies face supply shortages.
“I think we need to realise what is worse than 120 dollars oil is no oil. And Nigeria is very fortunate and thanks to the industrialisation through the fertiliser and the refinery to now be in a very fortunate position, which the majority of the world cannot say.”
He called on government to consider long term strategic planning, including building national reserves and strengthening supply chain resilience in anticipation of future global disruptions.
“I think governments have a role to say, we need to think the unthinkable. It comes at a cost, potentially, but that’s the role of government, to think the unthinkable and start doing it.”
Bird also revealed plans for a public listing of the refinery, describing the proposed offering as an inclusive investment opportunity aimed at broad participation across Nigeria and Africa.
“Speaking on behalf of Alhaji Aliko Dangote, his ambition is absolutely that this is the people’s IPO. And I think we want everyone to be incredibly proud, not just Nigerians, not just the Nigerian diaspora in Africa, but all of Africans.”
He emphasised that refining remains a cyclical business driven largely by global supply conditions, adding that cost discipline and operational efficiency are essential to maintaining resilience during market downturns.
“What goes up always comes down. Anyone that tells you otherwise, but anyone that tries to predict the fuel price, it’s a fool’s game. But it is cyclical. That is guaranteed.”
