Faith Nyasuguta
Nigeria’s Dangote refinery, with a capacity of 650,000 barrels per day (b/d), has officially started selling gasoline to the domestic market. The state-owned Nigerian National Petroleum Corporation (NNPC) is the refinery’s sole buyer, paying in US dollars for September gasoline deliveries.
From October, a crude-for-gasoline swap arrangement will be implemented, with NNPC settling payments in the local currency, naira.
The price for gasoline from Dangote is set at $736 per tonne, equivalent to 898.78 naira per litre ($0.55/l), with a retail price of N950.22/l in Lagos. This price reflects recent increases caused by the reduction of government subsidies on fuel, leaving gasoline pricing to be determined directly between suppliers and buyers under Nigeria’s Petroleum Industry Act. This shift marks a significant change in Nigeria’s fuel pricing structure, emphasizing market-driven rates rather than relying on government intervention.
NNPC has historically depended on imports to meet the nation’s gasoline demands, as the country’s refineries have struggled with underperformance for years. The start of Dangote’s gasoline sales is a major milestone, with hopes that it will ease Nigeria’s reliance on imported fuel.
However, the refinery is still in the early stages of ramping up production, having supplied 16 million litres of gasoline over the past weekend—far below its full capacity of 57 million litres per day. Full-scale operations are expected to commence between October and November once the residual fluid catalytic cracker (RFCC) becomes fully functional.
Once operational at full capacity, the refinery will significantly boost Nigeria’s ability to meet its domestic gasoline needs. NNPC has committed to supplying Dangote with 385,000 barrels of crude oil per day from October, with gasoline exclusively sold to NNPC for local distribution. This arrangement aims to stabilize fuel supply in the country, which has long been plagued by shortages and pricing fluctuations due to dependency on imports.
While gasoline production is focused on the domestic market, the refinery also plans to produce diesel for other buyers. As it ramps up operations, Dangote aims to become a key player in the domestic and regional energy markets, contributing to Nigeria’s goal of achieving energy independence.
The refinery’s ability to meet domestic demand has become even more critical as global fuel prices continue to fluctuate, and the Nigerian government’s subsidy reductions increase the cost burden on consumers. With Dangote’s operations gaining momentum, it’s expected that NNPC’s reliance on costly imports will gradually diminish, saving the country significant foreign exchange reserves.
This development comes amidst broader reforms in Nigeria’s petroleum sector, as the government continues to implement the Petroleum Industry Act, a landmark legislation aimed at increasing transparency and efficiency in the industry. The act encourages private investment in refining capacity and infrastructure, with Dangote’s refinery standing as a flagship project under this new policy environment.
In the coming months, all eyes will be on the Dangote refinery as it works to meet its production targets and help transform Nigeria’s fuel supply landscape. The successful ramp-up of operations is anticipated to bring much-needed relief to consumers while boosting the country’s economy by reducing import dependency and enhancing domestic energy production.
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