The Dangote Refinery is poised to have a transformative impact on Nigeria’s economy by reducing the country’s reliance on imported fuel and stabilizing petroleum product prices. Since commencing operations in January 2024, the refinery has already made significant strides, slashing diesel prices from ₦1,700 to ₦1,020 per liter and reducing the ex-depot price of Premium Motor Spirit (PMS) from ₦950 to ₦890 per liter. These price cuts have been welcomed as crucial steps toward ending fuel scarcity and reducing inflationary pressures 2812.
The refinery’s ability to meet 100% of Nigeria’s refined product requirements is expected to eliminate the need for fuel imports, which have long burdened the country’s economy. Nigeria currently imports about 60 million barrels of gasoline per day, despite being one of the world’s leading oil producers. With the Dangote Refinery operational, the country is projected to save billions of dollars annually in foreign exchange, which could be redirected toward other critical sectors such as healthcare, education, and infrastructure 612.
In addition to stabilizing fuel prices, the refinery is expected to boost Nigeria’s manufacturing sector by providing raw materials for industries such as petrochemicals, fertilizers, and plastics. According to macroeconomic analyst Shakirudeen Taiwo, the refinery’s operations could turn the oil refining sub-sector from negative to positive, significantly improving the overall performance of Nigeria’s industrial sector. This, in turn, could drive economic growth and create thousands of jobs across the value chain 612.
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The refinery’s impact on Nigeria’s foreign exchange reserves is another critical benefit. By reducing the demand for imported refined products, the refinery is expected to ease pressure on the Naira and strengthen the country’s external reserves. The Central Bank of Nigeria (CBN) has projected that the refinery’s operations could lower transportation costs, curb inflation, and improve Nigeria’s balance of payments. As of September 2024, Nigeria’s external reserves stood at $39.07 billion, a 17.4% increase from the previous year, providing a buffer against economic shocks 128.
Despite these positive developments, challenges remain. The refinery currently relies on imported crude oil to meet its production targets, as Nigeria’s domestic supply is insufficient. The Nigerian National Petroleum Corporation (NNPC) supplies between 350,000 and 450,000 barrels per day, but the refinery requires 650,000 barrels per day to operate at full capacity. To address this shortfall, Dangote plans to import crude oil from other markets, which could increase production costs and limit the refinery’s ability to stabilize fuel prices in the long term 28.
Looking ahead, the refinery’s full-scale operations are expected to further support Nigeria’s economic stability by ensuring an adequate supply of petroleum products and reducing reliance on imports. OPEC has expressed optimism that the refinery could push petrol prices lower, easing inflationary pressures and supporting economic growth. As Dangote himself stated, “The refinery is not just about making money; it’s about changing the way we do business in Africa”
