Written by SpringsNewsNG Media Limited, March 17, 2025. Several modular refiners in Nigeria are still awaiting their first crude oil supplies despite the Nigerian National Petroleum Company Limited (NNPCL)’s commitment to support them. This pledge was part of the federal government’s strategy to boost local refining capacity and reduce dependence on imported petroleum products.

Modular refineries, which are smaller and more flexible refining units, have been identified as a critical step toward achieving energy self-sufficiency. However, the lack of readily available crude has stalled their operations. Many refineries are operating below capacity or sourcing expensive feedstock from third parties, while some have been forced to suspend operations entirely.

An operator, speaking anonymously, expressed frustration: “We have invested millions of dollars in building our refinery, and everything is ready to go. But without crude oil, we cannot start operations. The NNPC has been promising to supply us for months, but nothing has materialized.”

Eche Idoko, National Publicity Secretary of the Crude Oil Refinery-owners Association of Nigeria (CORAN), confirmed that modular refineries have yet to receive any crude oil or feedstock from NNPC since the naira-for-crude scheme began in October 2024. “Most of the modular refineries are producing at low capacity. They’ve had to source feedstock alternatives from third parties, which is usually very expensive,” Idoko said.

Currently, Nigeria has 30 licensed modular refineries. Five are operational and producing diesel, kerosene, black oil, and naphtha: Waltersmith refinery (5,000 bpd), Aradel refinery (11,000 bpd), OPAC Refinery (10,000 bpd), Duport refinery (2,500 bpd), and Edo refinery (6,000 bpd). About 10 others are under various stages of completion, while the rest have received licenses to establish.

Idoko added that the Edo refinery relies on third-party supplies, increasing landing costs fourfold. Waltersmith and Aradel refineries source directly from their marginal fields, but even that is insufficient to meet their plant needs.

Industry insiders suggest that NNPC’s focus has been skewed towards larger refineries, particularly the Dangote Petroleum Refinery. On March 11, NNPC announced discussions with Dangote Refinery to extend its naira-for-crude contract, originally implemented in October 2024, for another term. Under this arrangement, NNPC has supplied 48 million barrels of oil to Dangote Refinery, while other smaller refineries have been left out.

A Technical Sub-Committee on the Naira-for-Crude Policy recently reviewed the policy. The meeting included key stakeholders such as Wale Edun, Minister of Finance and Coordinating Minister of the Economy (joining virtually), Zacch Adedeji, Executive Chairman of the Federal Inland Revenue Service (FIRS), representatives from the Nigerian Upstream Petroleum Regulatory Commission, the Central Bank of Nigeria, Dangote Petroleum Refinery, and NNPC Trading Ltd.

Sources from the meeting revealed that discussions focused on sustaining the policy. NNPC presented a crude delivery report, while the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) provided a domestic production report covering Dangote Petroleum Refinery, NNPC Warri Refinery, and Port Harcourt Refinery. The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) gave an update on crude availability for local refining.

Despite the committee’s efforts, modular refiners continue to struggle with limited access to crude oil, raising concerns about the effectiveness of the naira-for-crude policy and the future of local refining capacity.