Nigerian oil and gas expert Ademola Adigun has called for an end to the crude-for-naira agreement between the country’s government and 650,000 barrels per day (bpd) Dangote refinery – referring to it as unsustainable and counterproductive to the goal of subsidy removal, according to Daily Trust.

Adigun voiced his concerns on Channels Television on April 4, where he lamented the lack of transparency and clarity in talks between both parties.

“I think they’re negotiating and they weren’t able to come to an agreement for many reasons,” he remarked, adding: “I think both parties have been less than upfront with what has been done. Government can only meet its obligations if it has enough crude to everybody. A lot of the crude from Nigeria has been impaired by loans they’ve taken”.

According to expert, the new deal would stifle competition and reintroduce subsidies through a back door – while also lacking transparency and being in direct opposition to the government’s stated goal of liberalising the downstream sector.

“It’s a subsidy,” Adigun said, noting: “Subsidies benefit people. And, there’s nothing wrong with subsidy. If your policy is to remove subsidy to free the oil and gas sector, why bring back subsidy through the backdoor?”

His comments highlight broad concerns from numerous stakeholders in Nigeria’s energy sector who have argued that the crude-for-naira deal skews the market and solidifies Dangote’s already notable monopoly – making competition from other refineries difficult.

Suggesting alternatives, Adigun underscored the importance of a more transparent and inclusive policy that supported local refineries while also upholding free market principles.

“Rather than depending solely on one refinery, why not empower others? Why not increase licensing, improve infrastructure, and create room for more players to participate fairly in the sector?” he said.

Commencing for the first time in October 2024, the crude-for-naira deal was originally introduced to supply crude oil to Dangote refinery in naira to help solve problems with the country’s foreign exchange.