The Dangote Oil Refinery has commenced petrol processing, following delays caused by recent crude shortages, according to a report by Reuters. Devakumar Edwin, a vice president at Dangote Industries Limited, confirmed the development on Monday, noting that the Nigerian National Petroleum Company (NNPC) Ltd would be the exclusive purchaser of the refinery’s petrol output.
This announcement comes as the NNPC grapples with severe financial challenges, including a mounting debt to petrol suppliers, raising concerns over the sustainability of Nigeria’s fuel supply. The NNPC’s financial difficulties have already led to persistent fuel shortages and price hikes across the country.
The $20 billion Dangote Refinery, situated on the outskirts of Lagos and built by Nigerian billionaire Aliko Dangote, began operations in January, initially producing diesel and jet fuel. With a capacity of 650,000 barrels per day, the refinery is the largest in Africa and is expected to significantly reduce Nigeria’s dependence on imported petroleum products.
“We are testing the product [petrol], and subsequently, it will start flowing into the product tanks,” Edwin stated, although he did not specify when the petrol would be available on the local market. He emphasized that if the NNPC does not purchase the petrol, the refinery would export it, as it has been doing with aviation jet fuel and diesel.
The introduction of petrol from the Dangote refinery is anticipated to ease some of the supply challenges that the NNPC has been facing. Since January, the NNPC has accumulated $6 billion in debt to oil traders, severely impacting its ability to meet domestic fuel demands. This financial strain has contributed to fuel queues across the country since July, causing a surge in fuel prices.
Despite being Africa’s top oil producer, Nigeria has long relied on imported fuel due to the prolonged neglect of its national refineries. The commencement of petrol production at the Dangote refinery is seen as a critical step towards addressing this issue and enhancing Nigeria’s energy security.
However, the NNPC’s financial woes continue to cast a shadow over the nation’s fuel supply. The company recently reported a record-breaking net profit of ₦3.297 trillion for the financial year ending December 2023, a 28% increase from the previous year. Despite this, the NNPC has acknowledged that its significant debt obligations are placing immense pressure on its operations.
In a press statement released on Sunday, the NNPC’s Chief Corporate Communications Officer, Olufemi Soneye, admitted that the company’s financial strain poses a potential threat to its ability to maintain a consistent fuel supply across the country. The company remains committed to its role as the supplier of last resort, as mandated by the Petroleum Industry Act (PIA), but the current challenges highlight the precarious state of Nigeria’s fuel supply chain.
As the Dangote refinery ramps up its petrol production, industry observers will be watching closely to see if this development can help stabilize Nigeria’s fuel supply and mitigate the financial pressures facing the NNPC.
