Key Points
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Dangote refinery’s petrol unit suffers extended delays, worsening Nigeria’s outlook.
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Nigeria will stay dependent on costly fuel imports for months.
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Refinery delay threatens government subsidy reform plans and economic stability.
The $20 billion Dangote plant in Lagos, which is Africa’s largest oil refinery, may keep its gasoline production unit offline for a few more months. This adds to the uncertainty in Nigeria’s already shaky fuel market.
The facility only recently started making diesel and aviation fuel, and it hasn’t yet made any progress in making gasoline, which is the most important fuel for the domestic market.
Industry insiders who were briefed on the matter said that ongoing technical problems and supply bottlenecks have delayed the commissioning of the petrol unit. This means that Nigeria still has to rely on expensive imports, even though the government thought the refinery would soon ease demand pressures.
The plant is refining some crude oil, but the operators are still being careful about setting deadlines for petrol production.
The petrol unit at the Dangote refinery is holding up progress
The setback is bad news for both investors and the Nigerian government, which has long called the refinery a game-changer that could end Africa’s biggest economy’s reliance on imported gasoline. Nigeria has been exporting crude oil for decades, but it has been importing almost all of its refined products. This has drained foreign reserves and caused inflation by raising the cost of subsidies.
Marketers say that the country will have to keep importing large amounts of gasoline in the coming months because the refinery’s petrol unit is still not working. This will put even more pressure on the country’s foreign exchange reserves.
According to a report by Africa-news, the Nigerian National Petroleum Company Limited, which is in charge of imports, has also had trouble with logistics because there aren’t enough dollars and ports don’t work well.
Analysts say that the delay could hurt the government’s promises to stabilize supply and cut losses related to subsidies. An energy economist in Lagos said, “The refinery’s problems show how serious Nigeria’s structural fuel crisis is.” “The fiscal and currency strain will last until petrol production starts.”
Risks to fuel supply as imports keep coming in
The refinery was supposed to start making gasoline in the middle of 2024, but operators now say it might not happen until late 2025 if problems keep happening. People who know how the operations work say that the complicated technical calibrations and crude blending needs are turning out to be harder to fix than they thought.
Even though there have been delays, the production of diesel and aviation fuel has helped ease shortages, and some exports have already been made. But gasoline is still the standard that will show how the refinery really affects the economy. For now, Nigerians will have to deal with high gas prices while the government tries to figure out how to pay for imports and settle subsidy arguments.
Billionaire Aliko Dangote is in charge of the refinery, which has been called one of the most ambitious industrial projects in Africa. When it is fully up and running, it should be able to process 650,000 barrels of crude oil every day. But for the millions of people who need gasoline to get around and make electricity, the wait for local gas supplies could be longer than expected.
