Reported by Ariajegbe Sylvia Esezobor
The removal of Nigeria's petrol subsidy did more than end a decades-old fiscal burden. It exposed a hard truth that the government had spent years avoiding: the country does not produce enough crude oil to feed its own refineries. That is the assessment of the Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, who said on Friday that Nigeria cannot currently supply the Dangote Petroleum Refinery with the 700,000 barrels per day it needs to operate at full capacity.
"We are still not at the point where we can give Dangote Refinery 700,000 barrels of crude oil; we don't have enough to service Dangote Refinery," Oyedele said during an appearance on Channels Television's Politics Today. He was blunt about the implications. "Even if we have 700,000 barrels today to give Dangote — the Nigerian crude is the sweet crude — it would not be the most optimal input for Dangote. Dangote needs to still import some heavy crude. The reality is that today we do not have up to 700,000 free crude to give anyone, including Dangote."
The figures bear him out. Nigeria's combined crude oil and condensate production averaged approximately 1.67 million barrels per day between March and August 2026, according to data from the Nigerian Upstream Petroleum Regulatory Commission. That output is shared among joint venture partners, production-sharing contracts and the Nigerian National Petroleum Company Limited, which holds the Federation's share. Under typical arrangements, crude is allocated roughly 45:55 among parties, with portions carved out for cost oil to cover production expenses and royalties before profit oil is shared. What remains available to the government — the so-called free crude — is a fraction of headline production figures. Oyedele disclosed that before President Bola Tinubu's reforms, NNPC had less than 100,000 barrels of free crude remaining. "We had almost entirely exhausted our share of crude oil due to petrol subsidy," he said. "The government resorted to printing money after exhausting its revenues, but the funds were insufficient. We then began using future crude oil production to secure borrowing for subsidising current consumption. That was a crisis waiting to happen."
The Dangote Refinery, with a nameplate capacity of 650,000 barrels per day that has been scaled up to 700,000, represents Nigeria's most ambitious attempt to end its dependence on imported refined products. But its ability to operate at full capacity has been constrained by the availability of domestic crude. In August 2026, the refinery received an average of 565,000 barrels per day of Nigerian crude, nearly twice the previous year's average, according to Kpler data. Yet it has also turned to imports from Guyana and the United Arab Emirates to supplement its feedstock, a development that exposes the gap between the country's refining ambitions and its upstream realities. The naira-for-crude deal introduced by the Tinubu administration was designed to provide some stability by allowing domestic refiners to purchase crude in local currency, and Oyedele said it had worked to a degree. But the fundamental constraint remains: there are not enough free barrels to go around.
Oyedele's comments came during a broader defence of the government's decision to remove the petrol subsidy in May 2023, a policy that has reshaped Nigeria's fiscal landscape and sparked intense political debate ahead of the 2027 general elections. He disclosed that subsidy removal released N15.8 trillion to the Federation Account between June 2023 and December 2025, with N10.4 trillion going to states and local governments. "In May 2023, 27 states could not reliably pay salaries," he said. "Today, none is in that position." He argued that returning to the old subsidy regime would cost more than N20 trillion annually, and even the N500 per litre promised by some opposition candidates would cost over N16 trillion a year. "That is nearly everything the Federation Account shared among all three tiers of government in 2025," he said. "The consequences for salaries, pensions, schools, hospitals and security are not hard to imagine."
The minister also rejected the characterisation of the proposed alternative as a production subsidy. "A true production subsidy supports a producer who cannot compete at market prices," he said. "This is different. It is a discount on crude, passed through to the pump. That is a consumption subsidy by another route, with the same bill attached." He warned that fixing pump prices while crude, freight and exchange rates move would shift the risk onto the public balance sheet, and he estimated that the exchange rate could approach N3,000 to the dollar within months if subsidy were restored, with so-called subsidised petrol costing at least N2,000 per litre.
The political stakes of the debate are considerable. Former Vice President Atiku Abubakar, the presidential candidate of the African Democratic Congress, has promised a capped production subsidy tied to locally refined petrol, arguing that Nigeria can lower pump prices by discounting crude to domestic refiners. Former Anambra Governor Peter Obi of the Nigeria Democratic Congress has said corruption, not subsidy, is the problem, and that eliminating it could reduce the cost by half. Oyedele dismissed the feasibility of those proposals, saying critics "don't know what they're talking about" when they suggest crude can simply be discounted. The Nigeria Labour Congress has given the government a two-week ultimatum to reduce petrol prices to pre-2024 levels and begin minimum wage negotiations, while the government has announced a 30-day petrol discount at NNPC stations and a proposed N1,350 per litre ceiling on ex-gantry costs.
For Nigerians, the debate over subsidy, crude supply and fuel prices is not abstract. It determines the cost of transportation, the price of food and the viability of small businesses. The government's argument is that removing the subsidy was necessary to prevent a fiscal collapse and that the savings are now funding infrastructure, wages and social transfers. Its critics argue that the benefits have not reached ordinary households and that the reforms have deepened hardship. What Oyedele's disclosure adds to the conversation is a reminder that even the best-designed refining capacity cannot run without feedstock, and that Nigeria's ability to refine its own crude depends on producing enough of it in the first place. The country may have ended the subsidy, but the crude shortfall it exposed remains unresolved. As Oyedele put it, the naira-for-crude arrangement has helped, but "we don't have enough quantity to give as of yet." Until that changes, Nigeria's refineries — and the consumers who depend on them — will continue to look abroad for the fuel they should be making at home.
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