CEM REPORT, ENERGY | Nigeria’s historic moment of reduced dependence on imported petroleum products is on the horizon. Dangote Refinery, Africa’s largest refining facility, is gearing up to deliver Premium Motor Spirit (PMS), commonly known as petrol, to domestic marketers starting May 2024 according to a Bloomberg report.
The news comes on the heels of Dangote Refinery’s successful first export in March 2024. The refinery shipped 65,000 metric tons of low-sulfur straight run fuel oil and approximately 60,000 tons of naphtha, showcasing its operational capacity. The facility boasts an initial processing rate of 350,000 barrels per day, with plans to ramp up production towards its full capacity in the future.
Dangote Refinery commenced domestic distribution of diesel and aviation jet fuel. Marketers, leveraging their extensive network of approximately 150,000 retail stations nationwide, reportedly set the initial diesel price at 1,225 naira per litre ($0.96) after a collective purchase agreement.
Abubakar Maigandi, President of the Independent Petroleum Marketers Association of Nigeria (IPMAN), confirmed that marketers have begun transporting diesel from the Dangote Refinery. Negotiations regarding volume and pricing are still ongoing between IPMAN and the refinery.
Dangote Refinery to Reduced Reliance on Imports:
Previously, Nigeria relied heavily on imported fuel to meet its domestic needs. This dependence exposed the country to fluctuations in global oil prices and potential supply chain disruptions. The commencement of petrol production at Dangote Refinery signifies a major shift towards domestic production, potentially leading to greater price stability and security of supply.
Industry Optimism and Increased Capacity:
Devakumar Edwin, a Dangote Group executive, expressed confidence in the smooth operation of local fuel distribution. He highlighted the availability of “substantial quantities” of diesel and jet fuel, with both road and sea transportation being utilized for deliveries. Edwin further elaborated on the efficient loading process, mentioning that ships are typically filled with a minimum of 26 million litres, with efforts to maximize capacity by utilizing vessels capable of holding 37 million litres.
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Looking Ahead
The imminent introduction of domestic petrol supply by Dangote Refinery presents a promising future for Nigeria’s fuel security. This development has the potential to lessen dependence on imports, potentially stabilizing fuel prices and ensuring a more consistent supply for Nigerian consumers. While details regarding final pricing and volume agreements are still being finalized, the overall outlook is positive, paving the way for a more self-sufficient and resilient Nigerian fuel market.
