In a significant development for Nigeria’s energy sector, premium motor spirit (PMS) refined at the Dangote Petroleum Refinery has begun reaching filling stations across the country. This marks the first time in nearly 30 years that a substantial portion of Nigeria’s petrol demand is being met domestically, addressing long-standing fuel scarcity issues.
The Dangote Refinery, a $20 billion project, was built by Nigerian billionaire Aliko Dangote in Lagos. It is expected to revitalize Africa’s largest oil producer, which has experienced two months of petrol shortages. Despite previous investments to revive Nigeria’s four government-owned refineries, they have remained non-functional, making the launch of the Dangote Refinery a major turning point for the country.
**Fuel Supply to Meet Domestic Demand**
The Nigerian National Petroleum Corporation (NNPC) disclosed that it has purchased petrol from the Dangote Refinery at N898 per litre, with plans to meet Nigeria’s daily consumption of 40 to 50 million litres of petrol. NNPC continues to import 15 million litres to fill the gap. The refinery, equipped with 86 gantries for simultaneous truck loading, began distribution last week after resolving off-take rights and pricing issues.
Abubakar Maigandi, president of the Independent Petroleum Marketers Association of Nigeria (IPMAN), expressed optimism about the refinery’s impact on fuel availability. He highlighted that producing petrol locally would ease logistics challenges and lower importation costs, ultimately benefiting consumers.
Despite the refinery’s promise, pricing remains a concern. NNPC spokesman Olufemi Soneye confirmed that NNPC purchased PMS from Dangote at N898 per litre, refuting reports that the price was N760. This has raised questions about how the refinery’s operations will impact fuel prices for Nigerians.
Additionally, Devakumar Edwin, CEO of Dangote Refinery, announced plans to shift entirely to sea transport for fuel distribution, aiming to reduce logistics costs. Seventy-five percent of production can currently be transported by sea, with efforts to increase that to 100 percent.
While petrol from the refinery will be sold solely to NNPC for distribution, diesel will be available for purchase in naira by other off-takers. Chinedu Ukadike, IPMAN’s national publicity secretary, noted that direct sales to marketers could lower fuel costs by eliminating distribution inefficiencies.
NNPC has supplied 48.6 million barrels of crude oil to the Dangote Refinery since December 2023, and an additional 11.7 million barrels are expected in October 2024. Experts predict that the refinery’s operations could lead to marginal reductions in fuel prices, though logistics and market competitiveness remain challenges.
As Dangote ramps up production, the global oil refining industry is feeling the effects. Scotland’s Grangemouth refinery, unable to compete with larger facilities like Dangote’s, is set to close by mid-2025, transitioning to a fuel import terminal.
The Dangote Refinery’s launch represents a transformative moment for Nigeria’s energy independence and is expected to reshape both domestic and international fuel markets.
