The Economist Intelligence Unit (EIU) has said the operational ramp-up of the 650,000 barrels-per-day Dangote Petroleum Refinery & Petrochemicals is fundamentally transforming Nigeria’s downstream oil sector, significantly reducing the country’s dependence on imported fuel and strengthening its external position.
In its latest assessment of Nigeria’s fuel market and regulatory environment, the EIU noted that the refinery has already reshaped a sector previously characterised by heavy reliance on imported refined petroleum products despite Nigeria being Africa’s largest crude oil producer.
According to the report, the refinery met nearly 80 per cent of Nigeria’s domestic petrol demand in April and produced sufficient volumes to satisfy local consumption requirements as operations approached full capacity.
The EIU described Nigeria’s downstream petroleum sector before the refinery as “long dysfunctional,” noting that the country had remained almost entirely dependent on costly imported fuel while producing nearly 1.5 million barrels of crude oil daily.
“The gradual ramp up of the 650,000 barrel/day Dangote refinery since May 2023 has transformed Nigeria’s long dysfunctional downstream sector,” the report stated.
“The country’s main refineries, all state owned, had been inoperative for years and Nigeria was almost entirely reliant on costly imported fuel.”
The report added that the refinery’s operations have reduced import dependence, improved domestic fuel availability and strengthened Nigeria’s balance of payments position through lower import demand and rising exports of refined petroleum products.
The research and analysis division of The Economist Group, London, further stated that full operational capacity at the refinery and its planned expansion would support Nigeria’s economic growth and foreign exchange earnings over the medium term.
“Meanwhile, the attainment of full capacity at, and an increase in exports from, the Dangote refinery will support real GDP growth and foreign exchange earnings in 2026 and 2027 and beyond, as a planned doubling of the plant’s output comes on stream around the end of the decade,” it added.
Industry analysts said the refinery is increasingly positioning Nigeria as an emerging refining and export hub, altering energy trade flows across Africa and reducing vulnerabilities associated with fuel import dependence.
The EIU also noted that the refinery’s expansion coincided with major reforms in Nigeria’s downstream sector, including the removal of fuel subsidies and the introduction of market-driven pricing mechanisms.
However, the report observed that the transition from a state-dominated fuel import structure to large-scale domestic refining has triggered resistance from interests linked to the previous import regime.
The latest tensions followed the decision by the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) to relax restrictions on petrol imports despite the refinery’s growing capacity to meet domestic demand.
Dangote Industries subsequently initiated legal action, arguing that continued import approvals undermine domestic refining investments and conflict with the objectives of the Petroleum Industry Act aimed at promoting local refining capacity.
Analysts also noted that the availability of large-scale domestic refining capacity has improved Nigeria’s energy security and reduced exposure to external supply shocks and foreign exchange volatility.
The Centre for the Promotion of Private Enterprise (CPPE) similarly cautioned against unrestricted fuel importation, warning that it could weaken Nigeria’s industrialisation efforts and discourage investments in local refining.
Chief Executive Officer of CPPE, Muda Yusuf, said continued dependence on imported fuel had historically contributed to pressure on foreign reserves, exchange rate instability and fiscal leakages.
The refinery’s impact is also being reflected in Nigeria’s broader macroeconomic indicators. Earlier this month, S&P Global Ratings cited increased domestic refining capacity and rising hydrocarbon exports among factors supporting Nigeria’s sovereign credit rating upgrade — the country’s first in 14 years.
Beyond Nigeria, analysts said the Dangote Refinery is increasingly being viewed as a strategic industrial asset for Africa, where many countries remain heavily dependent on imported fuel despite rising energy demand.
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