Dangote Refinery, located in a free trade zone on the outskirts of Lagos, is set to sell petroleum products to Nigerians in US dollars, as disclosed by the Executive Director of Dangote Group, Devakumar Edwin.
In an exclusive interview with S&P Global Commodity Insights, Edwin explained that this decision stems from the refinery's location within a free trade zone, making it more practical to trade in dollars rather than the Nigerian naira. This move marks a shift in the traditional currency used for fuel transactions in Nigeria.
The timeline for the refinery's operations is also becoming clearer. Edwin revealed that the refinery is on track to receive its first crude cargo within the next two weeks, signaling the beginning of its production phase. By October 2023, it is expected to produce up to 370,000 barrels per day of diesel and jet fuel.
Furthermore, Edwin emphasized the refinery's commitment to meet the demand for petrol, with a goal to reach an impressive 650,000 barrels per day by November 30. He stated, "Right now, I'm ready to receive crude. We are just waiting for the first vessel. And so, as soon as it comes in, we can start." He clarified that a temporary delay in their original timeline was caused by the Nigerian National Petroleum Corporation Limited committing its crude oil to another entity on a forward basis.
Despite the change in the currency used for sales, Edwin assured that the refinery is prepared to exclusively use Nigerian crude oil for its operations as of November 2023.
This development is expected to have a significant impact not only on Nigeria but also on the broader African energy landscape. Edwin explained that the refinery is capable of processing various African crudes, Middle Eastern Arab Light, and even US light-tight oil. Approximately 50% of the refinery's production will cater to the entirety of Nigeria's fuel requirements.
Moreover, he highlighted the refinery's role in addressing the fuel supply challenges faced by import-dependent West Africa, especially after Nigeria's removal of fuel subsidies, which had led to price fluctuations and a thriving illicit gasoline market.
In terms of the economic implications, Edwin noted that the revenues generated from the refinery's operations will be reinvested to support further development initiatives in Nigeria. He underscored the commitment of Aliko Dangote, the founder of Dangote Group, to the country, stating, "The money will be coming back in, and it will go for further investments. [Aliko Dangote] is from Nigeria, and his focus is always on Nigeria."
Dangote Refinery's decision to sell fuel to Nigerians in dollars and its imminent production of refined products mark a significant milestone in Nigeria's energy sector, with the potential to reshape not only the country's energy landscape but also its economic future.
