Dangote Refinery Threatens to Export Petrol Amid Import Uncertainty

The Dangote Petroleum Refinery has issued a warning that it may begin exporting surplus petrol, citing significant challenges in planning domestic supply due to a surge in imported fuel. The refinery stated that imported Premium Motor Spirit (PMS), or petrol, constituted approximately 43% of the fuel supplied to the Nigerian market in July, despite the Dangote refinery's capacity to meet and exceed national demand.

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As a responsible energy provider, we have always endeavoured to keep adequate reserves to satisfy local demand at all times. However, in an environment where significant volumes of imported PMS continue to enter the market through licences issued by the regulator, and where there is limited visibility on future import volumes, it becomes commercially unsustainable to continue holding excess inventory indefinitely.

This situation has created considerable uncertainty for demand planning and inventory management, forcing the refinery to re-evaluate its commitment to holding large stocks for the domestic market. The refinery emphasized its consistent efforts to maintain adequate inventory and ensure a steady supply since commencing operations, which has required substantial investments in logistics and working capital.

"As a responsible energy provider, we have always endeavoured to keep adequate reserves to satisfy local demand at all times," the refinery said in a statement. "However, in an environment where significant volumes of imported PMS continue to enter the market through licences issued by the regulator, and where there is limited visibility on future import volumes, it becomes commercially unsustainable to continue holding excess inventory indefinitely."

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However, the absence of transparency regarding the actual volume of imported products expected into the country makes effective production and inventory planning increasingly challenging. Maintaining large stock positions without clear visibility into import volumes imposes substantial carrying costs on the refinery and ultimately undermines efficient market operations.

The refinery explained that any products not immediately absorbed by the domestic market would need to be exported to regional and international markets. This move, it clarified, is not a reflection of an inability to meet local demand but a response to excess inventory driven by market uncertainty. The company stressed that exports are necessary to avoid the storage and financing costs associated with holding unsold petrol, reaffirming its commitment to ensuring adequate fuel supply within Nigeria.

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Consequently, DPRP’s export volumes have increased in recent months, not because local demand cannot be met, but because excess inventory generated by market uncertainty must be evacuated to avoid unnecessary storage and financing costs.