In 2020, Nigeria witnessed a significant price disparity between the imports and exports of refined petroleum products, amounting to a difference of $43.56 billion. This highlights the country’s heavy reliance on importing petroleum products despite its abundant oil resources. Consequently, the inauguration of the Dangote Refinery by Mr. President himself holds great significance.
The Dangote Refinery, located in Lagos’s Lekki Free Trade Zone, has a daily refining capacity of 650,000 barrels of crude oil. Its successful operation will enable Nigeria to achieve self-sufficiency in the local refining of crude oil, reducing the need for costly imports and conserving foreign currency.
The refinery is designed with innovative technology and adheres to international standards set by reputable organizations such as the World Bank, US EPA, European Union, and Department of Petroleum Resources (DPR). It is capable of processing a wide range of crude oils, including those from the Middle East, Africa, and the US.
To enhance its infrastructure, the Dangote Group acquired 332 cranes, increasing its equipment installation capabilities. The group also constructed two quays with a load-bearing capacity of 25 tonnes/square meter to facilitate the direct delivery of oversized commodities to the site. Additionally, the port features two additional quays capable of accommodating Panamax ships and two liquid cargo handling quays. Among the six quays, there is also a roll-on/roll-off quay.
Currently, Nigeria operates four refineries under the Nigerian National Petroleum Corporation (NNPC), which function at a meager average of 10.46% of their combined daily capacity of 445,000 barrels. In 2021, Nigeria’s average daily oil production reached a record low of 1.6 million barrels, marking a decline of approximately 540,000 barrels per day since 1998. This lack of processing capacity at existing refineries has led to a fuel crisis in Nigeria, hindering socioeconomic development, burdening the government with high subsidy costs, and increasing dependence on imported petroleum supplies.
Nigeria stands out as one of the largest importers of refined petroleum products on the continent, creating a profitable market for refineries, particularly in Europe and the US. In the fourth quarter of 2022 alone, the country spent ₦1.79 trillion on importing Premium Motor Spirit (PMS).
By utilizing the installed capacity of the Dangote Refinery, Nigeria can save up to ₦1.02 billion daily, equivalent to ₦91.8 billion in a single quarter. This will enable the redirection of financial resources toward vital priorities such as infrastructure, agriculture, and education, leading to greater macroeconomic self-sufficiency and meeting the increasing demand for petroleum products among Nigerians.
In January of this year, the Major Oil Marketers Association of Nigeria (MOMAN) attributed the gasoline shortage crisis in the country to high vessel costs and inadequate transportation vehicles for petroleum products from depots to filling stations nationwide. In light of the refinery’s opening, the Nigerian Association of Road Transport Owners (NARTO) is seeking funding to expand its operations to meet the future demand for hauling petroleum products from the Dangote Refinery. This development will generate employment opportunities and alleviate the pressure to source dollars for petroleum product imports, thereby improving foreign exchange savings and enhancing the value of the Naira.
It is essential to note that the Dangote Refinery is a private organization driven by the goal of maximizing profits, distinguishing it from state-owned refineries. While Nigerians do not expect unproductivity, the refinery’s primary focus is on profitability.