Dangote Refinery could save Nigeria

Due to insufficient crude oil feedstock, the refinery has not yet begun producing gasoline even though it started operations in January 2024 and is currently producing diesel.

The nation’s ability to cut back on fuel imports is in jeopardy since the Nigerian National Petroleum Company (NNPC) Limited cannot supply the refinery’s demand. The Economist Intelligence Unit (EIU) cautions that Nigeria’s economic advancement is in jeopardy because of the crude oil supply issue that the Dangote Petroleum Refinery and Petrochemicals in Lagos are currently experiencing.

Due to insufficient crude oil feedstock, the refinery has not yet begun producing gasoline even though it started operations in January 2024 and is currently producing diesel. The nation’s ability to cut back on fuel imports is in jeopardy since the Nigerian National Petroleum Company (NNPC) Limited cannot supply the refinery’s demand. In its study, the EIU implores the government to act quickly to resolve this matter in order to avert more Naira pressure and more stringent currency management by the Central Bank of Nigeria (CBN).

Given that petroleum products make up a sizable amount of Nigeria’s import bill, local fuel production would have a big positive impact on the country’s economy and currency. With a 650,000 barrel per day capacity, the Dangote refinery has the ability to change Nigeria’s petroleum situation and lessen need on imports.

Nigeria, which has long been a gasoline importer and exporter of oil, could undergo a radical change as a result of the Dangote fuel refinery. Politicians, corporations, and the media all view this fact as a failure and an embarrassment, but the new refinery has the power to alter this, the statement stated.

While the legal gasoline subsidy was eliminated in June 2023, the federal government continues to informally subsidize gasoline, contributing to currency losses and an increasingly difficult-to-finance fiscal imbalance. This gives the central bank even more motivation to return to more aggressive currency management, as we already anticipate, but the level of market intervention may increase.