Aliko Dangote, the prominent Nigerian business magnate, has stated that the Nigerian National Petroleum Company Limited (NNPCL) refineries are only capable of producing low-value premium motor spirit. In a recent interview, Dangote claimed that NNPCL’s refineries lack the capacity to compete with his 650,000-barrel-per-day refinery, which is set to dominate the market.
According to Dangote, the Nigerian market is primarily a gasoline market, and his refinery is designed to produce 54% gasoline, in contrast to NNPCL’s refineries, which can only achieve 18% gasoline production. He noted that NNPCL’s refineries would primarily produce low-value fuel oil, which is not in high demand, resulting in significant losses. Dangote emphasized that without revenue in the downstream oil sector, there would be no investment in the industry, and if his company does not generate profit, no one else will venture into the business.
The Port Harcourt, Warri, and Kaduna refineries, currently shut down for maintenance and review, face significant challenges in competing with Dangote’s refinery. The Group Chief Executive Officer of NNPCL, Bayo Ojulari, has ruled out the sale of Nigerian refineries, despite their struggles. Dangote’s comments come after his refinery faced a dispute with the Nigeria Union of Petroleum and Natural Gas Workers (NUPENG) over the unionization of his drivers.
NUPENG had accused Dangote of monopolizing the fuel distribution market, but Dangote dismissed the allegations, citing his decision not to venture into fuel distribution due to concerns about being labeled a monopoly. The face-off between Dangote’s refinery and NUPENG highlights the complexities and challenges in Nigeria’s oil and gas industry.
As the Nigerian government continues to grapple with the refineries’ underperformance, Dangote’s assertions underscore the need for significant investment and reforms in the sector. The fate of the Nigerian refineries and the country’s downstream oil sector hangs in the balance, with Dangote’s refinery poised to play a major role in shaping the industry’s future. With the Nigerian market being a significant player in the global oil and gas industry, the developments in the country’s downstream sector are being closely watched by international observers.
