Dangote Refinery Faults Continued Fuel Imports, Says Local Capacity Can Meet Nigeria’s Demand

• Dangote Petroleum Refinery and Petrochemicals says the continued issuance of petroleum product import licences is creating uncertainty in Nigeria’s downstream market despite the refinery’s capacity to meet and exceed domestic Premium Motor Spirit (PMS) requirements.

• The refinery says imported PMS accounted for about 43 per cent of fuel supplied into the Nigerian market in July, raising questions over the continued reliance on large-scale imports when substantial domestic refining capacity is available.

• Dangote Refinery says rising imports are making demand forecasting and inventory management increasingly difficult, with excess products subsequently being exported to regional and international markets to avoid mounting storage and financing costs.

• The refinery is calling for greater transparency and market coordination, saying policies that strengthen local refining would improve energy security, conserve foreign exchange and maximise the economic benefits of Nigeria’s investment in domestic refining capacity.

August 26, () — The management of Dangote Petroleum Refinery and Petrochemicals (DPRP) has faulted the continued issuance of petroleum product import licences, saying Nigeria’s growing reliance on imported Premium Motor Spirit (PMS) is creating uncertainty in the domestic market despite the availability of sufficient local refining capacity.

The refinery said it remains capable of meeting and exceeding Nigeria’s domestic petrol requirements but expressed concern that substantial volumes of imported PMS continue to enter the country.

According to market data available to the refinery, imported PMS accounted for approximately 43 per cent of fuel supplied into the Nigerian market in July.

The development, it said, raises questions about the necessity of continued large-scale imports at a time when Nigeria has significantly expanded its domestic refining capacity.

Dangote Refinery said it remains committed to supporting the country’s energy security and ensuring uninterrupted fuel availability, adding that it has consistently maintained adequate inventory and reserved product volumes to guarantee steady supply to the domestic market since commencing operations.

Import Uncertainty Disrupts Planning

However, the refinery said the lack of transparency over the actual volume of imported petroleum products expected into the country was making production and inventory planning increasingly difficult.

It explained that maintaining large volumes of fuel in storage requires substantial expenditure on storage facilities, logistics and working capital.

According to the refinery, the situation becomes commercially unsustainable when it is unable to determine how much of the domestic market will be supplied by locally refined products and how much will be taken up by imported fuel.

“As a responsible energy provider, we have always endeavoured to keep adequate reserves to satisfy local demand at all times.

“However, in an environment where significant volumes of imported PMS continue to enter the market through licences issued by the regulator, and where there is limited visibility on future import volumes, it becomes commercially unsustainable to continue holding excess inventory indefinitely,” the refinery said.

It emphasised that better visibility on import volumes would allow it to align production and inventory levels with actual domestic demand and reduce unnecessary carrying costs.

Dangote Refinery says rising imports are making demand forecasting and inventory management increasingly difficult, with excess products subsequently being exported to regional and international markets to avoid mounting storage and financing costs.

Why Dangote Is Exporting More Fuel

The Refinery explained that when surplus products are not immediately absorbed by the Nigerian market because of competing imports, they have to be exported to regional and international markets.

It said this was responsible for the increase in its export volumes in recent months.

The refinery stressed that the development should not be interpreted as an indication that it lacks the capacity or willingness to supply the Nigerian market.

Rather, it said the growing exports were a prudent operational response to market conditions created by the continued inflow of imported PMS.

According to the company, retaining excess products indefinitely would increase storage and financing costs and undermine efficient operations.

“Consequently, DPRP’s export volumes have increased in recent months, not because local demand cannot be met, but because excess inventory generated by market uncertainty must be evacuated to avoid unnecessary storage and financing costs,” it said.

The refinery maintained that it remains ready, willing and able to supply the Nigerian market and would continue to prioritise reliable domestic availability.

Domestic Refining Capacity

The concerns come against the backdrop of Nigeria’s longstanding dependence on imported refined petroleum products.

For decades, the country relied heavily on imports to meet domestic petrol demand, despite being one of Africa’s major crude oil producers. The situation exposed consumers to international price movements, increased pressure on foreign exchange and contributed to persistent challenges in the downstream petroleum sector.

The commencement of operations at the Dangote Refinery was expected to change that dynamic by providing large-scale domestic refining capacity and reducing Nigeria’s dependence on imported petroleum products.

The refinery has since supplied refined products to the Nigerian market while also developing export markets for products in excess of domestic requirements.

Dangote Refinery has argued that greater utilisation of local refining capacity would help conserve foreign exchange, deepen domestic value addition and improve Nigeria’s energy security.

The company a cautioned that any supply shortfall resulting from market distortions should not automatically be attributed to Dangote Refinery.

It said excessive imports and limited visibility over future import volumes could make it difficult for domestic refiners to accurately forecast demand and optimise production.

The refinery maintained that it has consistently demonstrated its ability and commitment to serving the Nigerian market.

It said where local producers are unable to accurately forecast domestic demand because of unpredictable import volumes, any resulting market imbalance should be assessed in the context of the broader market structure.

The company reiterated that it would continue to maintain sufficient reserves to protect consumers against supply disruptions but noted that holding excess inventory indefinitely was not commercially sustainable.

Call For Greater Transparency

The refinery therefore called for greater transparency in the issuance of petroleum product import licences and improved coordination among regulators, importers, refiners and other stakeholders.

It said a clearer understanding of expected import volumes would enable local refiners to plan production more efficiently, optimise inventories and reduce unnecessary storage and financing costs.

The company also urged policymakers to pursue measures that support domestic refining and create a more coordinated petroleum products market.

According to the refinery, strengthening local refining would help conserve foreign exchange, reduce Nigeria’s exposure to external supply disruptions and maximise the economic benefits of investments in domestic refining infrastructure.

Dangote Refinery emphasised that its growing exports should not be viewed as a withdrawal from the Nigerian market.

Rather, it said the exports were a consequence of managing excess inventory in a market where imported products continue to compete with locally refined fuel despite the availability of sufficient domestic refining capacity.

The refinery reiterated its commitment to meeting and exceeding Nigeria’s petroleum product requirements, while urging greater policy clarity and market coordination to ensure that the country’s growing refining capacity is effectively utilised.