After more than a year since its launch in May 2023, Dangote Refinery on Tuesday produced its first batch of Premium Motor Spirit (PMS), commonly known as petrol, from its 650,000 barrels-per-day facility.
At a press conference, Aliko Dangote, the billionaire businessman and owner of the Lagos-based refinery, proclaimed the day as a significant milestone for Nigerians. “It’s a day of celebration,” he said, assuring citizens that they can now expect high-quality petrol that will extend the life of vehicle engines and eliminate the issues many have faced. “The quality here will match that of anywhere in the world. We will ensure that nobody beats us in terms of quality,” Dangote added.
‘We’ll Save Forex’
Dangote mentioned that once his company finalizes arrangements with the Nigerian National Petroleum Company Limited (NNPCL), the product will be available in the market. “As soon as we finalize with the NNPCL, our product will start reaching the market. We will help revive industry and manufacturing, initiate real import substitution, save foreign exchange, and stabilize the naira. This will also help reduce inflation and the cost of living,” he stated.
In December 2023, Dangote, Africa’s leading industrialist, began operations at his $20 billion facility in Lagos with an initial capacity of 350,000 barrels per day. Despite initial regulatory hurdles, the refinery aims to reach its full capacity of 650,000 barrels per day by the end of the year. The refinery has already started supplying diesel and aviation fuel to local marketers and has now added petrol to its output.
NNPCL Debt Challenge
The Dangote Refinery’s petrol production comes at a time when the NNPCL has admitted to owing substantial debts to petrol suppliers, a situation that threatens the stability of fuel supply in the country. Reports indicate that the NNPCL’s $6 billion debt to suppliers has exacerbated petrol shortages, a recurring issue since early 2024.
The NNPCL has previously attributed the supply shortages to logistics challenges, flooding, and other factors. However, in a statement on Sunday, NNPCL spokesman Olufemi Soneye acknowledged that the financial strain has placed significant pressure on the company, jeopardizing the sustainability of fuel supply.
Nigeria, Africa’s most populous nation, continues to grapple with energy challenges, with all its state-owned refineries currently non-operational. The country heavily relies on imported refined petroleum products, with the state-run NNPCL being the primary importer. Fuel queues have become a common sight, and the removal of subsidies in May 2023 has seen petrol prices triple, from around ₦200 per litre to approximately ₦800 per litre, adding to the difficulties faced by citizens.
Simultaneously, the government’s unification of forex windows led to a sharp decline in the value of the naira, plummeting from ₦700 to over ₦1,600 per dollar on the parallel market. This has driven up the prices of food and basic commodities, exacerbating inflation and the economic strain on Nigerians.