The Dangote Refinery, a $20 billion project with a capacity to process 650,000 barrels of crude oil per day, has begun selling refined petrol to the local market.
Located on the outskirts of Lagos, the refinery rolled out its first batch of refined petrol on Tuesday, a major step expected to ease Nigeria’s chronic fuel shortages.
At an event in Lagos to commemorate the launch, Aliko Dangote, president of Dangote Refinery, spoke about the impact the refinery would have on the region.
“This product will bring relief to Nigerians and improve the oil market in Nigeria and sub-Saharan Africa,” he said.
The refinery, which started producing naphtha and jet fuel in January, is expected to reach full capacity by the end of the year. With its production capabilities, the plant aims to address the recurring gasoline shortages in Nigeria, one of Africa’s largest oil producers.
Nigeria currently relies on imported refined petrol due to the collapse of its three government-owned refineries, despite being a major oil exporter.
The country spends billions of dollars annually on fuel imports, putting pressure on its currency, the naira.
Mr Dangote said the new refinery could help stabilize the naira by reducing the demand for foreign currency. “I think it will give stability to the naira, whereby you remove 40% of the demand for dollars in the market, and that will actually stabilize the market,” he said.
No Relief for Nigerians
At full capacity, the plant could disrupt European fuel exports to Africa and significantly reduce Nigeria’s dependency on foreign fuel imports.
The Nigerian Midstream and Downstream Petroleum Regulatory Authority announced that the refinery would initially supply 25 million litres of petrol daily to the domestic market in September, increasing to 30 million litres daily from October.
The development is expected to reduce fuel queues that have plagued the country since July. Ironically, it is not providing any relief to longsuffering Nigerians.
Following the announcement of the Dangote Refinery’s entry into the market, state-owned Nigerian National Petroleum Corporation (NNPC) raised petrol prices from N617 to N855 per litre at its filling stations in Abuja and Lagos.
While there was no official statement from NNPC on the price increase, the new price of N855 per litre was displayed at NNPC filling stations on Tuesday, confirming what many Nigerians had feared.
Some NNPC stations sold petrol for as high as N897 a litre.
The new increase has come despite that the Nigerian government has agreed to sell crude to the Dangote Refinery in naira.
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