The Economist Intelligence Unit (EIU) has stated that the gradual expansion of the 650,000 barrels-per-day Dangote Petroleum Refinery & Petrochemicals is reshaping Nigeria’s downstream oil industry, cutting reliance on imported fuel and improving the country’s external financial position.
In its latest assessment of Nigeria’s petroleum market and regulatory framework, the EIU noted that the refinery has significantly altered a sector that had long depended heavily on imported refined products despite Nigeria being Africa’s largest crude oil producer.
According to the report, the refinery supplied nearly 80 per cent of Nigeria’s domestic petrol demand in April and is now producing enough fuel to meet local consumption needs as it moves closer to full operational capacity.
Describing the sector as previously “dysfunctional,” the EIU said Nigeria had for years relied almost entirely on expensive fuel imports while producing around 1.5 million barrels of crude oil daily.
“The steady ramp-up of the 650,000 barrels-per-day Dangote refinery since May 2023 has transformed Nigeria’s long-troubled downstream sector,” the report stated.
It added that Nigeria’s state-owned refineries had remained inactive for years, forcing the country to depend heavily on imported petroleum products.
The report further explained that the refinery’s operations have reduced fuel import dependence, enhanced local fuel supply and strengthened Nigeria’s balance of payments through lower import costs and increased exports of refined products.
The research arm of The Economist Group also projected that the refinery reaching full capacity, alongside planned expansion projects, would boost Nigeria’s economic growth and foreign exchange earnings in the coming years.
According to the EIU, higher exports from the refinery are expected to support real GDP growth and increase foreign exchange inflows in 2026, 2027 and beyond, especially with plans to double output capacity by the end of the decade.
Industry experts noted that the refinery is gradually positioning Nigeria as a major refining and export hub in Africa, reshaping regional energy trade and reducing vulnerabilities linked to fuel imports.
The EIU also observed that the refinery’s emergence coincided with key reforms in Nigeria’s downstream sector, including the removal of fuel subsidies and the adoption of market-driven pricing policies.
However, the report pointed out that the shift from a fuel import-driven system to large-scale domestic refining has generated resistance from stakeholders who benefited from the former import structure.
This follows recent tensions after the Nigerian Midstream and Downstream Petroleum Regulatory Authority relaxed restrictions on petrol imports despite increasing domestic refining capacity.
Dangote Industries subsequently filed a lawsuit, arguing that continued import approvals could undermine local refining investments and contradict the goals of the Petroleum Industry Act, which encourages domestic refining.
Analysts also said the refinery has improved Nigeria’s energy security by reducing exposure to global supply disruptions and foreign exchange fluctuations.
Similarly, the Centre for the Promotion of Private Enterprise warned against unrestricted fuel imports, saying they could weaken industrialisation efforts and discourage investment in local refining projects.
Chief Executive Officer of CPPE, Muda Yusuf, noted that dependence on imported fuel had historically strained Nigeria’s foreign reserves, contributed to exchange rate instability and encouraged fiscal leakages.
The refinery’s growing influence is also reflected in broader economic indicators. Earlier this month, S&P Global Ratings cited increased domestic refining capacity and rising hydrocarbon exports among the factors behind Nigeria’s recent sovereign credit rating upgrade — the country’s first such improvement in 14 years.
Beyond Nigeria, analysts said the Dangote Refinery is increasingly regarded as a strategic industrial asset for Africa, where many nations still rely heavily on imported petroleum products despite rising energy demand.
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