President Bola Tinubu’s naira-for-crude policy is safeguarding Nigeria from the full impact of the Middle East energy crisis, with the Presidency saying the initiative has strengthened domestic fuel supply, stabilised the economy and reinforced national energy security amid global disruptions.
A policy commentary by the Senior Special Assistant to the President on Media and Publicity, Temitope Ajayi, said the decision approved by President Tinubu in July 2024 to allow crude oil sales to the Dangote Refinery in naira has proved to be a strategic safeguard at a time when the ongoing Iran-Israel-United States conflict has thrown global energy markets into turmoil.
The Presidential aide highlighted that the naira-for-crude initiative, which took effect on October 1, 2024, has enabled Nigeria to maintain uninterrupted availability of petroleum products even as several countries across Europe, Asia, Africa and parts of the United States battle severe shortages, soaring prices and prolonged fuel queues.
Ajayi explained that the war in the Middle East, now in its sixth week, has been aggravated by the closure of the Strait of Hormuz, a major global oil and gas transit route responsible for over 20 per cent of worldwide energy flows.
The closure, he said, has triggered widespread disruptions in the supply of crude oil and refined petroleum products, sending prices of LPG, LNG, petrol and diesel upward and placing severe strain on economies around the world.
Ajayi observed that while Nigeria has not been completely immune to rising prices, the country has so far avoided the acute domestic scarcity witnessed elsewhere, owing largely to the operational capacity of the Dangote Refinery in Lekki, Lagos state.
He said the refinery has validated the strategic importance of local refining by ensuring consistent supply of petroleum products for the domestic market and, at the same time, supporting supply needs across parts of Africa.
The presidential aide cited examples from other countries where governments have introduced emergency energy-saving measures, including reduced work schedules, fuel restrictions, early school closures and shortened business hours, to cope with supply shortages and high energy costs.
By contrast, he said, Nigeria has continued to enjoy full product availability without the widespread queues that previously characterised domestic fuel distribution, adding that this has been made possible by local refining and improved supply coordination.
“A few examples: Vietnam is encouraging people to work from home to reduce transportation costs. The Thai government has ordered civil servants to conserve energy in public buildings and is considering whether to compel private businesses to do the same.
“Bangladesh told universities to close early for a holiday and imposed daily limits on fuel sales. Pakistan has implemented emergency measures, including a four-day government work week and temporary school closures, to conserve energy. Indian restaurants are closing their doors due to LPG scarcity. In Egypt, shops and restaurants are mandated to close by 9 pm every day as part of the government’s exceptional measures to combat soaring energy prices.
In the Philippines, the government has declared a national energy emergency. In parts of the United States, Americans join long queues to buy fuel,” he added.
Ajayi further stated that despite more attractive export opportunities in the global market, the Dangote Refinery has continued to prioritise Nigeria’s energy needs, helping to preserve local supply and moderate domestic pressure.
“Fortunately, the Dangote Refinery has largely shielded Nigeria from the worst effects of the global supply crisis. By scaling up production at a critical time before the escalation of the conflict, the refinery has met Nigeria’s refined products requirements.”
He pointed to a recent reduction of petrol price by N75 per litre by the refinery, despite a rise in global crude prices and the payment of an additional premium of up to 18 dollars per barrel for Nigerian crude cargoes, as evidence of the strategic value of local refining.
He also said the refinery’s operations have helped Nigeria eliminate the heavy demurrage costs previously incurred by the Nigerian National Petroleum Company Limited , NNPC in maintaining safety stock on floating vessels, while also strengthening the country’s resilience against external shocks.
“Petrol queues, even during festive seasons, have disappeared since the Refinery commenced PMS production in Oct 2024. What is perhaps not visible to many Nigerians is how this was achieved while simultaneously eliminating the huge demurrage bill that NNPC used to incur in maintaining safety stock on several floating vessels.”
Ajayi noted that beyond securing local supply, the current global crisis has elevated Nigeria’s role as a strategic exporter of refined petroleum products to African markets.
He disclosed that the refinery exported nearly 500,000 tonnes of refined products to various African countries in March alone, generating export earnings for Nigeria and enhancing the country’s standing as a dependable regional energy supplier.
He maintained that the development underscores the broader economic significance of local production, saying it preserves foreign exchange, creates jobs, stimulates industrial growth and protects the country from the vulnerabilities associated with import dependence.
Ajayi added that the Dangote Refinery now represents a critical pillar of Nigeria’s energy sovereignty and a key driver of sustainable economic growth.
The technical committee driving Nigeria’s naira-for-crude policy includes, among others, the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, and the Executive Chairman of the Nigerian Revenue Service, Zacch Adedeji.