Dangote Refinery Begins Petrol Processing, NNPC Set to Be Exclusive Buyer
The Dangote Oil Refinery has officially commenced the processing of petrol, marking a significant milestone for Africa’s largest refinery. This development follows delays due to recent crude oil shortages, according to a report by Reuters. Devakumar Edwin, Vice President at Dangote Industries Limited, confirmed that the Nigerian National Petroleum Company (NNPC) Ltd will be the sole purchaser of the refinery’s petrol.
The news comes at a critical time as the NNPC faces severe financial difficulties, grappling with mounting debt to petrol suppliers. This has raised concerns about the sustainability of Nigeria’s fuel supply, which has already been strained by persistent fuel shortages and rising prices since July.
The $20 billion Dangote Refinery, located on the outskirts of Lagos and constructed by Nigerian billionaire Aliko Dangote, began operations in January, initially producing diesel and jet fuel. With a production capacity of 650,000 barrels per day, the refinery is expected to drastically reduce Nigeria’s dependence on imported fuel products.
“We are currently testing the petrol product, and it will soon start flowing into our product tanks,” said Edwin, though he did not specify when the petrol would be available on the local market. He also noted that if the NNPC does not purchase the refinery’s petrol, the company would export it, as it has been doing with its aviation jet fuel and diesel.
The introduction of petrol from the Dangote Refinery is anticipated to ease some of the supply challenges currently faced by the NNPC. Since January, the NNPC has accumulated $6 billion in debt to oil traders, affecting its ability to meet domestic fuel demands. This debt has led to fuel shortages and price hikes across the country.
Despite being Africa’s top oil producer, Nigeria imports nearly all of its fuel due to the prolonged neglect of its national refineries. The petrol production from the Dangote Refinery is seen as a crucial step in addressing this long-standing issue and enhancing the country’s energy security.
The financial strain on the NNPC, however, remains a significant concern. The company recently reported a record-breaking net profit of ₦3.297 trillion for the financial year ending December 2023, an increase of ₦749 billion, or 28%, from the previous year. Despite this profit, the NNPC disclosed in a press statement on Sunday that it is under immense financial pressure due to its substantial debt obligations, which could threaten its ability to maintain a consistent fuel supply nationwide.
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“The financial strain has placed considerable pressure on the company and poses a threat to the sustainability of fuel supply,” the NNPC stated. Nonetheless, the company reaffirmed its commitment to ensuring the availability of petroleum products across the country, in line with its responsibilities under the Petroleum Industry Act (PIA).
As the Dangote Refinery ramps up its petrol production, all eyes will be on how this development will impact Nigeria’s fuel supply and the broader energy sector in the coming months.
