The Dangote Petroleum Refinery, Africa’s largest oil refinery, is contemplating the export of its refined products, including Premium Motor Spirit (PMS), following a lack of support from local petroleum marketers. This decision comes as the refinery has begun producing petrol but faces significant hurdles in selling its products domestically.
Local Market Resistance
According to Devakumar Edwin, Vice President of Oil and Gas at Dangote Industries Limited, over 95% of local petroleum marketers have opted not to purchase diesel from the refinery due to its competitive pricing. The refinery has reduced its diesel prices from ₦1,200 to ₦900 per litre to stimulate sales, but this strategy has not yielded the desired results. Local marketers have expressed concerns that these lower prices are adversely affecting their businesses, leading to a blockade against the distribution of Dangote’s products within Nigeria.
Edwin noted that the refinery has already begun exporting aviation fuel and diesel, and if local traders or the Nigerian National Petroleum Company (NNPC) continue to reject its petrol, they will have no choice but to export the PMS as well.
Production Milestone
The Dangote Refinery officially started producing PMS on September 3, 2024, marking a significant milestone in its operations. With a capacity to refine 650,000 barrels per day, the facility is positioned to meet Nigeria’s fuel demands while also potentially exporting surplus products to neighbouring countries.
Despite these advancements, the refinery has encountered unexpected challenges since commencing operations. Edwin expressed surprise at the difficulties faced in securing crude oil supplies, leading the refinery to import crude from countries such as the United States and Brazil. The refinery is currently constructing storage tanks to accommodate imported crude, as local supply remains inadequate.
Economic Implications
The inability to sell refined products domestically not only affects the refinery’s profitability but also has broader implications for Nigeria’s economy. The country has long been dependent on costly fuel imports, which have strained foreign exchange reserves. By producing and potentially exporting refined products, the Dangote Refinery could help alleviate some of these economic pressures.
Moreover, the refinery’s operations are expected to create numerous jobs and stimulate local industries, further contributing to economic growth. However, the current resistance from local marketers poses a significant obstacle to realising these benefits.
As the Dangote Refinery navigates the complexities of the local market, its consideration of fuel exports highlights the ongoing challenges within Nigeria’s petroleum sector. The refinery’s ability to secure a stable domestic market for its products will be crucial for its success and for the country’s efforts to reduce reliance on imported fuels. Stakeholders will be watching closely to see how these dynamics unfold in the coming months.
By Joseph Johnston
Youth Editor,
Egogonews Hub
