There is no doubt that the Dangote Refinery is poised to position Nigeria as a major player in the oil industry, not only in West Africa but across the entire African continent.
With an installed capacity of 650,000 barrels per day, the refinery has the potential to meet the entirety of Nigeria’s petroleum product demand. This will save the country an estimated $4 billion in foreign exchange currently spent on importing petroleum products. Additionally, the refinery is expected to generate significant foreign exchange earnings through its export operations.
At a time when the Nigerian economy is gasping for breath, the Dangote Refinery is offering a lifeline through job creation and wealth generation. This, in turn, will lift millions out of poverty, significantly improve Nigeria’s foreign reserves, and contribute to making the nation great once more.
Commissioned by President Muhammadu Buhari with much fanfare, the refinery came online amidst high expectations of its economic impact. Recognizing its importance, the Central Bank of Nigeria ensured that the refinery had a strong start due to its potential for profitability, economic value addition, and steady growth.
Since becoming operational, the refinery has unsettled the European aviation fuel market and disrupted the dominance of key industry players. Its success in exporting finished petroleum products marks a reversal of Nigeria’s long-standing reliance on imports, exacerbated by the neglected state of NNPC-owned domestic refineries that have resisted rehabilitation efforts.
Before the Dangote Refinery’s entry, the domestic market for finished petroleum products was monopolized by the NNPCL, which preferred importation over reviving its refineries. The Dangote Refinery has effectively broken this monopoly, although the NNPCL is resisting the change, scaling down its initial 20% shareholding in the refinery to 7% in favor of investing in the CNG project as an alternative energy source to refined petroleum products.
However, CNG is a new product in the market with uncertain prospects for replacing PMS in the near future.
As President Bola Ahmed Tinubu eyes re-election in 2027, his administration’s policy on guaranteeing Nigeria’s energy security will be crucial. Continued reliance on imported petroleum products will place further strain on the Naira, driving up the cost of goods and services and exacerbating inflation, making life more difficult for the average Nigerian.
The Dangote Refinery has become a litmus test for Tinubu’s administration. It offers a pathway to end Nigeria’s dependence on imported petroleum products, eliminate subsidies, save foreign exchange, strengthen the Naira, boost foreign reserves through exports, and bring inflation down to reasonable levels.
The choice is clear: prioritize local production and marketing of petroleum products, which will lead to job creation, wealth generation, and a stronger economy, or continue down the path of import dependence, unemployment, poverty, and a weakened domestic currency in the global payment system.
The responsibility rests squarely on the President’s shoulders.
Mahmud Shuaibu Ringim
HALIM Consulting Ltd
mahmudshuaibu44@gmail.com
