The Chief Executive Officer of the Dangote Refinery, Aliko Dangote has complained that the Nigerian National Petroleum Corporation Limited (NNPCL) and oil marketers are not buying from them.
Throughout 2024, he has constantly vented about the lack of cooperation from NNPC and marketers regarding oil production and distribution. He emphasizes that he is a producer, not a retailer, and cannot distribute oil to consumers.
Background
The Dangote Refinery, with a production capacity of 30 million litres per day and currently holding 500 million litres in reserve, has the potential to significantly alter Nigeria’s reliance on imported petrol. This reserve is sufficient to supply the country for over 12 days without imports.
Despite this capability, the Nigerian Ports Authority continues to anticipate the arrival of imported petrol, indicating a persistent dependency on foreign oil supplies.
The Nigerian Ports Authority announced it is expecting a vessel with 20,115,000 litres of petrol at the Tincan Island Port in Lagos on Wednesday, October 30, 2024.
This brings Dangote to why marketers are still focusing on imported Fuel despite his readily available fuel on the ground.
The Kerfuffle Between Dangote Refinery, NNPCL and Oil Importers
In September, Dangote filed a lawsuit for damages against the Nigeria Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) for allegedly issuing import licenses to the Nigerian National Petroleum Corporation Limited (NNPCL) and other oil-importing companies. However, he decided to withdraw the suit in January 2025 during the adjournment date.
The federal government also approve naira-based crude transactions that could provide a financial edge for local fuel purchases from the Dangote Refinery, allowing Nigerian marketers to bypass the dollar-driven international oil market. The government committed to allocating 445,000 barrels a day of crude oil for domestic consumption to local refineries, beginning with the Dangote Refinery for six months. Naira-based crude and petroleum transactions will employ a market-driven exchange rate and competitive crude pricing. The African Export-Import Bank was selected as the pilot settlement bank to facilitate these transactions.
The Government’s Push for CNG as an Alternative Fuel
Also, Nigeria’s drive to transition from Premium Motor Spirit (PMS) to compressed natural gas (CNG) reflects an effort to diversify energy sources and reduce costs. Recent agreements under the Presidential CNG Initiative, including plans to convert 800 taxis in Abuja, aim for a projected 30% reduction in shuttle fares. This initiative also addresses critical infrastructure gaps by expanding refilling stations, which are essential for the widespread adoption of CNG in public transport.
To bolster this initiative, the Dangote Group’s significant Investment of $280 million in CNG infrastructure align with Nigeria’s Nationally Determined Contribution under the Paris Agreement, which aims for net-zero emissions by 2060. Aliko Dangote emphasized the role of private sector involvement in supporting government initiatives toward sustainable energy.
Balancing Reliance on Local Production with CNG Initiatives
The juxtaposition of reliance on the Dangote Refinery and the push for CNG presents an opportunity for Nigeria to reduce fuel imports and combat rising prices. However, realizing these benefits will require substantial infrastructure improvements, clear policies, and market stability to facilitate the integration of both locally refined petrol and CNG. If fully integrated into the market, these initiatives could allow Nigeria to better control fuel prices, enhance energy security, and lower emissions. Partnerships can drive innovation and efficiency in energy use, transforming Nigeria’s fuel landscape.
While the push for CNG and local production is commendable, the success of these initiatives hinges on addressing economic and foreign exchange-related challenges. Only through concerted efforts from both the government and the private sector can Nigeria hope to achieve a sustainable and self-sufficient energy future. The path to industrialization is vital, as private sector refining of crude oil now provides raw materials not just for agriculture but also for industries like chemicals, paints, building materials, and textiles.
