David Hen: Dangote Refinery Will get Solely 5 Crude Cargoes Month-to-month, Far Beneath Agreed Volumes
The Chief Government Officer of the Dangote Refinery, David Hen, has referred to as for larger transparency in Nigeria’s crude oil allocation system, warning that offer shortfalls are forcing the refinery to purchase Nigerian crude at greater worldwide premiums.
Talking in an interview with ARISE NEWS on Wednesday, Hen mentioned the refinery is at present working at its full processing capability of 650,000 barrels per day, enough to fulfill each Nigeria’s home gasoline demand and regional provide wants. Nevertheless, he careworn that insufficient and inconsistent crude provide stays a significant problem.
“That’s appropriate. We’re at capability processing 650,000 barrels a day, which means not solely Nigeria’s home gasoline necessities but in addition the area,” he mentioned.
On authorities help, Hen defined that the refinery operates beneath the Crude-for-Naira programme, which he clarified is commonly misunderstood.
“It’s priced at full worldwide benchmark crude oil pricing, nevertheless and not using a overseas alternate implication. It has been very profitable in stabilising the consequences… however it isn’t a reduction or a subsidy,” he said.
Regardless of this framework, Hen revealed that the refinery is receiving considerably much less crude than agreed beneath the association.
“We ought to be getting about 13 to fifteen cargoes a month… at present we’re solely getting 5. In order that’s an underperformance towards that pre-agreed quantity contract,” he mentioned.
He additionally raised issues about crude high quality mismatches, noting that the refinery typically doesn’t obtain its most popular grades regardless of submitting specs.
“Our {hardware} is designed round a sure crude slate… not solely will we not get the complete allocation, fairly often we don’t get the grades that we’re highlighting as our preferences,” Hen added.
Because of this, the refinery is pressured to supply Nigerian crude from the worldwide market—typically at a steep premium.
“We’re now paying over $18 per barrel premium for those self same Nigerian crude grades… that worth is cash that Nigeria is leaking to the worldwide buying and selling neighborhood,” he mentioned.
Hen famous that about 30–35% of the refinery’s crude comes through the Crude-for-Naira programme, whereas a further 30–40% is sourced internationally, underscoring the ability’s flexibility as a service provider refinery.
On gasoline pricing, Hen mentioned the refinery is totally uncovered to international market forces and operates with out subsidies, making it weak to fluctuations pushed by geopolitical tensions.
“We try to preserve some stability inside a commercially acceptable vary… however all our value inputs—from crude to freight and insurance coverage—are impacted,” he defined.
He acknowledged the burden on shoppers, describing the present scenario as a broader cost-of-living disaster.
“It is a cost-of-living disaster… each side of the fashionable financial system is impacted by power,” Hen mentioned, including that even when international conflicts ended instantly, provide chain disruptions would persist for months.
Wanting forward, Hen urged Nigerian authorities to rethink broader value buildings and regulatory pressures affecting the trade.
“I believe there’s a chance for the federal government to take an all-encompassing view… not simply crude value, however the price of doing enterprise in Nigeria,” he mentioned.
He additionally emphasised the significance of long-term planning, together with constructing strategic reserves.
“Authorities and trade should suppose the unthinkable… COVID ought to have woken us up concerning the vulnerability of world provide chains,” he famous.
Clarifying the aim of the Crude-for-Naira coverage, Hen careworn that it’s designed to stabilise Nigeria’s overseas alternate, to not subsidise the refinery.
“It was not put in place to profit Dangote Refinery… it’s purely a forex mechanism to convey stability,” he mentioned.
On the refinery’s future, Hen disclosed plans for a public itemizing, describing it as an inclusive alternative.
“That is the folks’s IPO… we would like it to be some of the broadly subscribed IPOs on the planet,” he added.
Hen concluded by reiterating the cyclical nature of the oil market and the necessity for operational effectivity.
“What goes up all the time comes down… our job is to be cost-effective, disciplined and resilient by the cycle,” he mentioned.
Boluwatife Enome
Times Nigeria