Dangote refinery reduces forex pressure on Nigeria, Report

The Dangote Petroleum Refinery and Petrochemicals is significantly easing pressure on Nigeria's foreign exchange market by cutting the nation's dependence on imported refined fuel, according to a report by The Economist Intelligence Unit (EIU). The refinery, with a 650,000-barrel-per-day capacity, has fundamentally reshaped Nigeria's downstream oil sector. Previously, the country, despite being Africa's largest crude oil producer, relied almost entirely on costly imported fuel. The EIU noted that the refinery met nearly 80% of domestic petrol demand in April as operations approached full capacity. "The gradual ramp-up of the 650,000-barrel/day Dangote refinery since May 2023 has transformed Nigeria’s long dysfunctional downstream sector," the EIU report stated. "The country’s main refineries, all state-owned, had been inoperative for years, and Nigeria was almost entirely reliant on costly imported fuel." The EIU's research and analysis division added that the refinery's full operational capacity and planned expansion will further bolster Nigeria's economic growth and foreign exchange earnings. The report anticipates that a doubling of the plant's output around the end of the decade will support real GDP growth and foreign exchange earnings in 2026 and 2027. However, the transition has not been without friction. The EIU report noted that the shift from a state-dominated import structure to large-scale domestic refining has triggered resistance from interests linked to the old import regime. Recent tensions arose when the Nigerian Midstream and Downstream Petroleum Regulatory Authority relaxed restrictions on petrol imports, even as the Dangote refinery increased its capacity to meet domestic demand.

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The gradual ramp-up of the 650,000-barrel/day Dangote refinery since May 2023 has transformed Nigeria’s long dysfunctional downstream sector. The country’s main refineries, all state-owned, had been inoperative for years, and Nigeria was almost entirely reliant on costly imported fuel.