Nigeria’s refining revolution has a monopoly problem
Summary
Nigeria opened the largest-ever stock sale in Africa, the IPO of Dangote Petroleum Refinery, which processes 700,000 barrels of crude oil daily. This new refinery helps reduce Nigeria’s need to import fuel, but fuel prices have risen after government subsidy cuts and market pricing changes.Key Facts
- Dangote Petroleum Refinery is located in Lagos and cost about $20 billion to build.
- The refinery started producing diesel and jet fuel in early 2024 and petrol by September 2024.
- It processes 700,000 barrels of crude oil per day, up from 650,000 barrels.
- Nigerian state-owned refineries have struggled for years due to corruption and poor management despite over $18 billion spent on repairs.
- Before, Nigeria imported most of its petrol and diesel, costing billions in subsidies and hurting the economy.
- The government removed petrol subsidies and introduced a system letting refineries buy crude oil using local currency to reduce reliance on foreign money.
- Petrol imports dropped from around 400,000 barrels per day in 2024 to about 83,000 barrels per day now.
- Fuel prices rose from about 185 naira ($0.14) per litre to over 1,000 naira ($0.75) after subsidy removal and market pricing.
- Global oil prices and currency changes still affect fuel costs in Nigeria because refineries must buy crude oil at market prices.
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