In a troubling revelation for Nigeria’s fuel industry, over 95% of petroleum product importers in the country are not purchasing fuel from the Dangote Refinery. This revelation was made by Devakumar V. G. Edwin, Vice President of Dangote Industries Limited, during a Spaces session on Wednesday.
The Dangote Refinery, one of Nigeria’s largest and most anticipated fuel production facilities, is facing significant challenges. According to Edwin, the refinery struggles to sell around 29 tankers of diesel per day due to low demand from local petroleum product importers.
This lack of local patronage has led to the refinery exporting most of its diesel and aviation fuel. The refinery has imported approximately 57 shiploads of crude oil so far, a necessity due to the limited local supply from the Nigerian National Petroleum Corporation (NNPC).
The situation is compounded by complaints from petroleum product marketers. They have recently written to President Bola Tinubu, expressing their concerns about how the refinery’s local diesel prices are affecting their businesses. The price of diesel at the Dangote Refinery has dropped from N1,200 per litre to N1,000, and now to N900. Marketers argue that these price reductions are creating market instability and harming their operations.
Despite these issues, the Dangote Refinery’s production capacity remains substantial. Edwin noted that 44% of the refinery’s petrol production capacity is enough to meet Nigeria’s entire local demand. However, the refinery’s struggle to secure local buyers means that this potential is not being fully utilized.
The refinery’s current predicament highlights a broader issue within Nigeria’s petroleum sector. The fact that around 29 tankers are lifting fuel from the depots of other importers daily reflects a market preference that does not favor Dangote’s offerings.
The reasons behind this lack of local patronage are multifaceted. Some industry observers point to pricing strategies and logistical challenges as potential factors. The refinery’s pricing adjustments, aimed at becoming more competitive, may be inadvertently disrupting the market.
Edwin’s comments shed light on the refinery’s operational struggles and the complexities of Nigeria’s fuel market. The Dangote Refinery was expected to play a crucial role in stabilizing the country’s fuel supply and pricing. However, the current situation suggests that achieving this goal is proving to be more difficult than anticipated.
The Nigerian fuel market is notoriously volatile, with frequent fluctuations in both supply and prices. The Dangote Refinery’s difficulties underscore the challenges facing the country’s efforts to achieve fuel self-sufficiency and stabilise prices.
Local marketers have expressed frustration with the current dynamics. They argue that the refinery’s pricing adjustments, while beneficial in the short term, are creating a challenging environment for their businesses. The reduced local prices have led to a situation where marketers are struggling to compete and maintain their profit margins.
The Dangote Refinery’s struggle to attract local buyers despite its capacity to meet local demand raises questions about the effectiveness of the country’s fuel distribution and pricing strategies. The market’s preference for other importers, combined with the refinery’s challenges, suggests a need for a reevaluation of how fuel products are marketed and distributed.
