By Barbara Nwaiwu
The Economist Intelligence Unit (EIU) has said the operational expansion of the 650,000 barrels-per-day Dangote Petroleum Refinery & Petrochemicals is significantly reducing Nigeria’s dependence on imported fuel while strengthening the country’s economy and foreign exchange earnings.
The EIU disclosed this in its latest assessment of Nigeria’s fuel market and regulatory environment released on Monday, noting that the refinery had transformed the country’s downstream petroleum sector, which previously relied heavily on imported refined products despite Nigeria being Africa’s largest crude oil producer.
According to the report, the refinery supplied nearly 80% of Nigeria’s domestic petrol demand in April and is approaching production levels capable of fully meeting local consumption requirements.
The report described Nigeria’s downstream sector before the commencement of refinery operations as “long dysfunctional,” stating that the country’s state owned refineries had remained inactive for years while Nigeria continued to depend on imported petroleum products despite producing nearly 1.5 million barrels of crude oil daily.
“The gradual ramp up of the 650,000 barrel/day Dangote refinery since May 2023 has transformed Nigeria’s long dysfunctional downstream sector,” the report stated.
“The country’s main refineries, all state owned, had been inoperative for years and Nigeria was almost entirely reliant on costly imported fuel.”
The EIU said the refinery’s increasing operations had improved domestic fuel availability, reduced import dependence and strengthened Nigeria’s balance of payments position through lower import demand and rising exports of refined petroleum products.
It added that the attainment of full operational capacity and planned future expansion of the refinery would further support Nigeria’s real Gross Domestic Product growth and foreign exchange earnings in the coming years.
“Meanwhile, the attainment of full capacity at, and an increase in exports from, the Dangote refinery will support real GDP growth and foreign exchange earnings in 2026 and 2027 and beyond, as a planned doubling of the plant’s output comes on stream around the end of the decade,” the report added.
Industry analysts also said the refinery is positioning Nigeria as an emerging refining and export hub in Africa while reshaping regional energy trade flows and reducing exposure to foreign exchange volatility and global fuel supply disruptions.
The report noted that the refinery’s expansion coincided with major reforms in Nigeria’s downstream petroleum sector, including the removal of fuel subsidies and the introduction of market-driven pricing mechanisms.
However, the EIU stated that the transition from a state dominated fuel import structure to large scale domestic refining had generated resistance from interests linked to the previous import regime.
The report referenced recent tensions following the decision by the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) to relax restrictions on petrol imports despite the refinery’s growing capacity to meet local demand.
According to the report, Dangote Industries subsequently initiated legal action, arguing that continued fuel import approvals undermine domestic refining investments and conflict with the objectives of the Petroleum Industry Act (PIA) aimed at encouraging local refining and reducing import dependence.
The Centre for the Promotion of Private Enterprise (CPPE) also cautioned against unrestricted importation of petroleum products, warning that the policy could weaken Nigeria’s industrialisation drive and discourage investments in local refining capacity.
Chief Executive Officer of CPPE, Muda Yusuf, said persistent fuel import dependence had historically contributed to pressure on Nigeria’s foreign reserves, exchange rate instability and fiscal leakages.
The report further stated that the refinery’s impact was already being reflected in Nigeria’s broader economic indicators, noting that S&P Global Ratings recently cited increased domestic refining capacity and rising hydrocarbon exports among factors supporting Nigeria’s sovereign credit rating upgrade, the first recorded in 14 years.
Beyond Nigeria, analysts said the refinery is increasingly being viewed as a strategic industrial asset for Africa, where many countries still depend heavily on imported fuel despite rising demand for transportation, manufacturing and electricity generation.
