How Dangote and Local Refineries Poised to End Fuel Importation
Owners of local refineries in Nigeria, including the Dangote Petroleum Refinery, have announced plans to help the country cease importing refined petroleum products within the next 18 months, provided the Federal Government collaborates with their strategies.
Under the umbrella of the Crude Oil Refiners Association of Nigeria (CORAN), these refiners highlighted that several refineries are nearing completion and will join the 650,000-barrel-capacity Dangote Petroleum Refinery.
In an interview with The Punch, CORAN Publicity Secretary Eche Idoko stated that the Dangote refinery, along with others in Nigeria, has the capacity to meet the nation’s fuel demands. This statement follows comments by the Chief Executive of the Nigerian Midstream and Downstream Regulatory Authority, Farouk Ahmed, who said the country would continue fuel importation to prevent a Dangote monopoly and ensure energy security.
Idoko stressed the importance of addressing fuel costs to tackle rising inflation, arguing that the government must work with local refiners to achieve this. “You can’t tackle inflation without addressing the pump price of petroleum products,” he said. “In 18 months, if the Nigerian government collaborates with our plans, we can completely stop the importation of petroleum products. Several refineries are at different stages of completion, and we can meet Nigeria’s consumption needs within this period.”
He also highlighted the issue of crude oil theft, which significantly hampers the upstream oil sector. Idoko explained that having local refineries will reduce crude theft, as refineries located near oil fields can receive crude without the need for long pipelines, which are often targets for theft.
Furthermore, Idoko urged that international oil companies (IOCs) should sell crude oil to local refineries at a lower price than the international market rate. He also recommended that crude transactions be conducted in naira instead of dollars to reduce production costs and alleviate pressure on the local currency.
Ending fuel importation, according to Idoko, would strengthen the naira against the dollar. He also suggested that IOCs should sell directly to local refiners rather than through European trading agents.
The Nigerian Midstream and Downstream Petroleum Regulatory Authority head had previously warned against relying solely on the Dangote refinery for fuel supply, noting that the refinery requested the cessation of import licenses to other marketers to become the sole supplier. “We cannot depend entirely on one refinery,” Ahmed stated, emphasizing the need to avoid monopolies and ensure energy security.
However, Aliko Dangote, President of Dangote Group, denied seeking a monopoly, pointing out that the Nigerian National Petroleum Company Limited is renovating government-owned refineries with significant investments.
Nigerians have called for government support for local refineries to reduce fuel prices. Dangote recently indicated that petrol supply from his refinery would begin between August 10 and 12, despite challenges in securing crude from IOCs.
An anonymous Dangote Group official mentioned that the refinery might export petrol if the crude supply issue persists.
Meanwhile, shareholders, under the Pragmatic Shareholders Association of Nigeria, condemned Farouk Ahmed’s claims about the quality of diesel from the Dangote refinery. The group’s National Coordinator, Mrs. Bisi Bakare, praised Dangote for his contributions to national development and criticized efforts to undermine the refinery’s reputation.
Bakare emphasized the need for support from regulatory bodies and IOCs, highlighting that the refinery could save Nigeria over 30% in foreign exchange currently spent on offshore refining. “We remain steadfast in our support of Alhaji Aliko Dangote’s vision to bolster the nation’s economy and create more opportunities for our citizens,” she concluded.
