Compiled and Analyzed by: Waheed Ogunjobi, PhD
INTRODUCTION.
Nigeria is experiencing an oil boom without prosperity. While our budget is predicated on $64.85 - $75 per barrel, Bonny Light trades at $126.32 and Brent at $103-$106. That is a windfall of $47 per barrel . With 1.84 million bpd, that is $86.48m extra per day, or N130.7 billion per day at N1,512/$. In 30 days, N3.9 trillion that was never budgeted.
Yet at the pump, Nigerians buy petrol at N1,430- N1,500 . This contradiction is at the heart of the naira-for-crude crisis.
As someone who is very close to the grassroots, I have heard citizens complained bitterly about how the current situation is deeply hurting and why the Federal Government must find a way out. I have even experienced the hardship myself. Some have placed the blame on the door step of Dangote forgetting that Dangote is a business man. This write-up therefore is aimed at shedding some lights on the issue by digging into the facts and figures.
Genesis: From Subsidy Removal to Naira-for-Crude.
In May 2023, subsidy was removed. The promise and the high expectations was that with 650,000bpd Dangote Refinery, Nigeria would stop importing fuel. Today, there have been some gains in terms of reducing fuel importation, but it is yet Uhuru as indicated below
Import bill has crashed - but not disappeared:
Q1 comparison (NBS): Q1 2024 = N3.81 trillion fuel imports. Q1 2025 = N1.76 trillion. Drop of 54% year-on-year. Also down 47% from Q4 2024.
-Annual comparison (CBN Balance of Payments): 2024 = $14.06 billion. 2025 = $10 billion.
Drop of $4.06bn, or 28.88%. In Naira terms, from N15.4 trillion to N8.96 trillion = 41.9% drop.
Volume comparison (Kpler/Vortexa):
Nigeria imported ∼400,000 bpd gasoline in 2024. In 2026 to date = just 83,000 bpd. In Jan 2025, shipments were 110,000 bpd - lowest since 2017 when we averaged over 200k-400k bpd. 52f89c1ec93ee615
Domestic supply now leads:
Oct 2025: domestic = 17.1m litres/day
- Dec 2025: 32m litres/day = +64.1% jump in one month
Jan 2026: 40.1m litres/day = 57.5% of total supply (total supply 64.9m litres). Imports down to 25.8m litres/day
But over the first 15 months (Aug 2024 - Oct 2025), we still imported 15.01bn litres (69%) vs domestic 6.67bn litres (31%) 610489c23262
Concrete gains:
FX saved: $4.06bn saved in one year.
- New export: Dangote exported $5.85bn worth of refined products in 2025 alone - petrol, diesel, aviation fuel. Diesel/gasoil exports up 23% to 48,000 bpd in 2026, supplying West Africa and Europe.
- Trade balance: Goods account surplus rose to $14.51bn in 2025 from $13.17bn in 2024, despite crude oil earnings falling 14.41% to $31.54bn.
Current account surplus still $14.04bn.
Belgium trade reversed: Before, we shipped crude to Belgium/Europe and shipped it back refined. Now Belgian Ambassador confirms that logic is dead.
Issues we must know:
- Dangote still imports crude: $3.74bn worth of crude imported as feedstock in 2025 because NNPC can't supply full 650k bpd.
- Govt refineries still dead: Port Harcourt, Warri, Kaduna shut. Port Harcourt only evacuating 0.376m litres diesel per day from old stock.
Capacity utilization of Dangote only 62.94% in Dec, peak 67.69%.
- Price not down: Because crude is sold at market price in Naira, not discount, Nigerians still pay import parity.
- Smuggling: Dangote blames cross-border smuggling for keeping prices high despite local supply.
Bottom line: Importation has dropped by more than half in value and by almost 80% in volume, and Nigeria has become a net exporter of refined products for the first time in 30 years. But we are saving dollars, not yet saving the consumer at the pump - because we are still buying our own crude at $103.
Down memory lane, in October 2024, the Federal Executive Council launched Naira-for-Crude. NNPC would sell crude to Dangote in Naira, not dollars, to reduce pressure on FX market. The logic was sound: Dangote was seeking $1bn monthly in FX to buy crude; stopping that demand would strengthen the Naira.
But implementation collapsed.
How Does Naira-for-Crude Actually Work?
It is not a discount. It is market price, payable in Naira.
- NNPC allocates crude from its share, e.g. from Okwuibome field operated under PSC.
- Price is not $65. FAAC documents showed sales at $74.87 to $80.34 when market was that price. Now that market is $103, it is $103.
- Payment: Dangote pays in Naira at Afrexim Bank advised rate, between N1,501 and N1,562 earlier this year.
- So Dangote does not need to go to parallel market to buy dollars.
Why is FG Pegging Dangote's Requirement by Half?
Dangote needs 13-15 cargoes per month, about 650,000 bpd. NNPC gives 4-5 cargoes, about 200,000-245,000 bpd.
Why? Forward sales.
NNPC has forward-sold substantial part of Nigeria's future production to secure about $21bn in crude-collateralized loans from Afrexim and traders. As a stakeholder admitted: "If you've already sold a substantial part of your production forward there will be an issue with supplying current need because you've already obtained money against your future production".
There is no contractual obligation to give Dangote all he needs. NNPC gives what it thinks is available on a case-by-case basis. Secondly, NNPC itself needs dollars to pay JV cash-calls and service debt.
Result: Dangote is forced to import 60% of his crude from the US - WTI - at international dollar price plus freight. If you import crude in dollars, you must sell product in dollars. That is why Dangote now prices petrol at $0.779/litre.
The PIA Argument vs Global Practice*
Government hides behind Petroleum Industry Act 2021. PIA says NNPC Ltd is commercial and must sell at market price. Selling at $65 is subsidy.
But PIA also has Domestic Crude Supply Obligation - Section 109. Minister can direct crude to domestic refineries for energy security.
What are the Global practice on the issue?
Saudi Aramco: Sells to the world at export price in dollars, but supplies domestic refineries, power plants and petrochemicals at a government-set price far below export. Cheap feedstock makes fuel cheap. Dollars earned abroad pay for discount at home.
UAE, Kuwait, Iran: Same - domestic refineries get crude at $20-$30 discount.
Norway: Equinor is privatized, but windfall above benchmark goes to $1.9 trillion Sovereign Wealth Fund, and citizens get free education, health and cash transfers.
- Indonesia: Mandates 25% of oil for domestic at $20 discount despite privatization.
Only Nigeria says a privatized NNPC cannot subsidize its own citizens.
Do Citizens Benefit From Crude-for-Naira?
For now, only FX, not price.
The deal was designed to save FX, not to reduce petrol price. Because crude is still sold at market price, petrol price remains high. The common man doesn't see N600 fuel, he only benefits indirectly if Naira becomes stable and inflation slows.
Has FX improved?
Yes, partially, but not because of naira-for-crude alone.
- Gap between official and black market collapsed from over 60% to under 2% since EFEMS was introduced.
- Naira appreciated 14.4% from N1,661 to N1,451 between Dec 2024 and Dec 2025..
- External reserves rose to $45.2bn-$48.44bn, highest in 7 years.
- Current account surplus rose to $5.3bn in Q2 2025 from $2.9bn in Q1, because Dangote reduced fuel imports.
So the refinery has helped reduce FX demand, but the waiver alone is not enough.
Why? Allocation is too small, NNPC still needs dollars for debt, and speculative demand remains. IMF says Naira remains undervalued by 25.6%.
Call For A Citizen-Centred Way Forward Without Returning to Subsidy.
We cannot sustain blanket subsidy, but we can be intelligent:
What can or should the government do ?
Ring-fence Domestic Crude: Legally peg 400,000 bpd for domestic consumption at $65 benchmark. Sell remaining 1.4m bpd at $112. Loss on domestic is $18.8m/day, but windfall on rest is $65.8m/day. Net still positive.
Direct Windfall Transfer: Create a Windfall Account under CBN. 50% of anything above $75 goes directly to mass transit CNG buses, direct cash transfer to 20m poorest households, and a stabilization fund to cut ex-depot price by N100-N200 per litre.
Fix Quantity, Not Just Currency:
Enforce PIA Section 109. Give 14 cargoes to Dangote and allocate to modular refineries. Remove free zone premium.
Stop Dollarization of Domestic Fuel: If crude is given in Naira, insist product is sold in Naira. Otherwise FX benefit is lost.
If Saudi Arabia - with 10 million bpd - can sell cheap crude to its people and still be richest, Nigeria - with 1.8 million bpd - can do same for 400,000 bpd for its 230 million citizens.
The issue is not economics. It is philosophy: Do we see crude as Federation revenue first, or as citizens' energy security first? The Tinubu's administration need to show how much of human face the administration has especially ad we go into the 2027 general election.
Dr. Waheed Ogunjobi, Journalist, Author, Writer, Schorlar, Policy and Strategic Communication expert and Public Affairs Analyst lives in Abeokuta and can be reached via 08035004741 or waheedogunjobi@gmail.com
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