Dangote Refinery, with a daily production capacity of 650,000 barrels, has seen low local demand for its petroleum products, prompting the company to consider alternative markets abroad. 

Reports reveal that the marketers are unhappy with the Refinery’s decision to lower its diesel price from ₦1,200 per litre to ₦900, which they argue undercuts their operations. 

Despite offering competitive prices, Dangote Refinery struggles to sell its diesel locally, managing only about 29 tankers per day. In light of this, most of the refinery’s diesel and jet fuel is exported.

Devakumar Edwin, vice president of Dangote Industries Limited, highlighted these issues during a recent media interaction. 

He explained that the reluctance of local marketers to purchase products has forced the refinery to look beyond Nigerian borders, exporting diesel that meets European standards. 

Edwin also confirmed that petrol production had commenced at the refinery, with further plans to increase local supply if demand rises. However, if Nigerian marketers or the Nigerian National Petroleum Company Limited (NNPCL) fail to lift the products, Dangote Refinery will have no choice but to continue exporting, as it currently does with other petroleum products.

The refinery’s initial vision, as Edwin noted, was to reduce Nigeria’s reliance on imported petroleum by refining crude oil locally. However, the company has faced challenges in securing crude for its operations. 

According to Edwin, the refinery now imports crude from countries such as the United States and Brazil, as domestic supply is insufficient. This shift in strategy undermines the refinery’s original goal of refining and distributing locally sourced crude oil to meet Nigeria’s demand.

Edwin frowned at the unexpected challenges, especially considering the refinery was designed to bolster Nigeria’s economy by adding value to local crude. He stated that despite the facility’s capabilities, Nigeria continues to export crude oil and import refined products, a cycle that has persisted for decades. 

He reiterated that while Dangote Refinery is ready to supply the Nigerian market, it will prioritise international buyers if local players do not engage.

In March, Dangote Refinery began exporting naphtha, followed by low-sulphur fuel oil in May, and started selling diesel and jet fuel domestically in April.

By June, it had started exporting diesel compliant with European regulations, further reflecting its pivot towards international markets due to inadequate domestic patronage.

The refinery owner said as soon as his company finalises modalities with the Nigerian National Petroleum Company Limited (NNPCL), the product will hit the market.

“Our PMS (Premium Motor Spirit) can be in filling stations within the next 48 hours depending on NNPCL,” he said.

Asked to speak on the pricing of petrol from his refinery, Dangote said, “It is an arrangement which is designed and approved by the Federal Executive Council led by His Excellency, President Bola Ahmed Tinubu.

“As soon as it is finalised, which he (Tinubu) is pushing, once we finish with NNPC, it can be today, it can be tomorrow, we are ready to roll into the market.

He declared that “it’s a celebration day” for Nigerians and assured all citizens that they “are now going to have good petrol while the engines of your vehicles will last longer. You will not be having an engine issue, which a lot of us were having. It won’t happen at all”.

“The quality here will match that of anywhere in the world; US, America, we will make sure that nobody will beat us in terms of quality,” Dangote said.

Last December, Dangote, Africa’s leading industrialist, commenced operations at his $20bn facility sited in Lagos with 350,000 barrels a day.

The refinery, which was initially bogged by regulatory battles, hopes to achieve its full capacity of 650,000 barrels per day by the end of the year.

“This is a good development”, Chima Echefule (@Chimacoeche) tweeted in response to the news.

But eddiebrendan the mediaguy @eddiebrendan seems yet unconvinced as netizen queries, “What’s the impact on the current price of fuel? That’s what’s most important at this time”.

As E Dey H0T (@As_E_Dey_H0T), tweets: “Now, I can smile. It is not just the smile ooo BUT the price too must reduce”.

Jess (@jessxluuna) believes Dangote Refinery will be a game changer for Nigeria’s quest towards local refining of PMS – “sounds promising! if it really happens, it’ll be a game changer for Nigeria”.

Meanwhile, local refining of crude oil has been an age-long conversation in Nigeria.

For years, expressions have centered on:

1. Will Local Refinery of Fuel lead to lower price of PMS at the filling Station?

2. Without subsidy, will Dangote Refinery sell close to N600 or it will tilt towards N1,000?

3. Will Local Refinery owned by Govt do better than the ones by individuals even when the citizens seem to agree that government doesn’t know how to run business efficiently?

4. Will this be the end of fuel scarcity both real and artificial scarcity we’ve been having till date?

Well, time shall tell.

But, currently, NNPC Limited’s tankers are already facing Dangote Refinery to get fuel with the netizens hoping will not turn around to call Dangote a monopolist.

Recall that the resurface of long queues at the filling stations created fears of impending fuel scarcity and possible hike in price.

However, the Nigerian National Petroleum Company Limited (NNPC Ltd) has clarified that the tightness in the supply of Premium Motor Spirit (fuel) currently being experienced in some areas across the country is as a result of logistics issues.

The Company said the issues ‘’have been resolved’’, adding that they are not currently contemplating changes in the price of fuel.

A statement made available to TECHECONOMY by Olufemi Soneye, the chief corporate communications officer of the NNPC Ltd. Reads:

“The Nigerian National Petroleum Company Limited (NNPC Ltd) wishes to clarify that the tightness in the supply of Premium Motor Spirit currently being experienced in some areas across the country is as a result of logistics issues and that they have been resolved.

“It also wishes to reiterate that the prices of petroleum products are not changing.

“It urges Nigerians to avoid panic buying as there is a sufficiency of products in the country”.

In a statement released by NLC President Joe Ajaero, the organization vehemently rejected the new pump price, deeming it provocative.

Ajaero criticized the fuel price increase, stating that it was intended to exacerbate poverty levels and intensify the hardships already faced by Nigerians.

The NLC expressed deep concern over the 18% surge in fuel prices, particularly during a period of significant difficulties for the Nigerian people.

Describing the hike as “sadistic and unacceptable,” Ajaero emphasized that it displayed insensitivity and a sense of triumphalism by the government against the suffering masses.

The NLC warned that such actions could push Nigerians to the brink and potentially override any mechanisms the government claims to have put in place as safeguards.

Bensoah, the NLC’s head of information and public affairs, further stressed that the adjustment in fuel prices was unacceptable to Nigerians. He emphasized that the increase jeopardizes socio-economic security, businesses, earnings, and overall quality of life for the populace.

Furthermore, the labor movement alleged that the Federal Government is contemplating raising fuel prices as high as N1,000 per litre.

The union questioned the benefits of such projected price hikes for both the people and the economy, particularly considering the ongoing discussions surrounding economic recovery.

NLC Warns Federal Government Against Provocative Fuel Price HikeThe NLC’s strong stance against the fuel price increase highlights growing concerns and frustrations within the Nigerian populace.

As Nigerians grapple with the persistent challenges of rising fuel costs and economic hardships, the NLC’s resistance serves as a call for the government to address the pressing issues and prioritize the well-being of its citizens

In response to this, some Nigerians have resorted to connecting their cooking gas (liquefied petroleum gas or LPG) to power their petrol generators, as gas is comparatively cheaper in the country. 

Interestingly, this is not the first time Nigerians have been engaged in such austerity moves. There have been several cases in the past when people connected their cooking gas to a petrol generator. But the trend grew exponentially due to the advent of social media, leading to massive awareness 

While this trend reflects the resourcefulness of Nigerians in finding cost-effective energy solutions, it is important to assess its implications and potential risks.

At the moment, one of the key factors driving this trend is the decline in the price of cooking gas. In May, the price of a 12.5kg cylinder of cooking gas dropped by 30 percent due to lower crude oil prices and a decline in global gas prices. 

This decrease has provided a temporary respite to cash-strapped households who have been grappling with rising inflation and the recent hike in fuel prices. The reduced cost of cooking gas has made it an attractive alternative to petrol for powering generators.

One of the videos seen by TechEconomy shows a technician in his workshop explaining how he connected a generator that uses Premium Motor Spirit to cooking gas. He said if a 12.5kg cylinder is filled with cooking gas, it will run a generator and last for three weeks. This video has sparked reactions and even triggered Nigerians to start doing something similar. 

Growing Concerns 

However, it is crucial to highlight that connecting cooking gas directly to petrol generators is not a safe or recommended practice, according to experts. 

Cooking gas and petrol are different fuels with distinct properties and intended uses. Gas cylinders and associated equipment used for cooking are designed and regulated for specific purposes and should not be connected to petrol generators, which have different requirements and specifications. 

Attempting to modify or repurpose gas cylinders or equipment can lead to hazardous situations such as leaks, explosions, and fires.

Lagos State Issues Warning

The Lagos State Government has raised concerns about the hazards and risks involved in the conversion process of using LPG-powered generators at homes and offices. 

Director General, Lagos Safety Commission, Lanre Mojola said improper ventilation, gas leakage, spark or heat from the generator, and inadequate installation of hybrid carburetors are among the potential risks associated with this practice. 

The use of sub-standard or expired cylinders further increases the risk of gas explosions. Therefore, it is essential to prioritize safety and adhere to recommended practices when operating any form of combustible fuel.

For those seeking alternative fuel options for generators, he said it is advisable to explore appropriate alternatives specifically designed for generator use. 

Dedicated gas-powered generators or dual-fuel generators that can run on both petrol and gas, following manufacturer instructions and safety guidelines, are viable options. These solutions ensure compatibility, safety, and optimal performance.

Furthermore, the conversion of petrol generators to LPG generators for domestic use offers several benefits beyond cost savings. 

LPG and compressed natural gas (CNG) are generally cheaper than petrol, contribute to cleaner air quality, and can provide greater fuel availability and independence from fluctuations in petrol prices or supply disruptions. Moreover, CNG and LPG combustion produce less noise, which minimizes noise pollution in residential areas.

To ensure a safe and reliable conversion, it is essential to seek qualified professionals for the installation of appropriate conversion kits. 

He said the Lagos State Ministry of Energy and Mineral Resources and Lagos State Safety Commission can guide professional vendors, installation procedures, and safety guidelines.

No Cause for Alarm

On the contrary, Philip Obin, the Managing Director of Potech Limited, an ICT and marketing firm, expressed confidence in the safety of connecting cooking gas to petrol generators. 

According to him, even if the hose breaks and gas leaks while there is a nearby fire, it would only result in a fire burning from the hose without causing an explosion. 

He explained in an interview with the Guardian that explosions occur when gas leaks in enclosed spaces like kitchens, where the gas fills up the room and ignites. However, since the cylinder and generator are placed outside, the chances of explosion are minimized due to sufficient ventilation that disperses the leaking gas. 

In terms of cost and efficiency, Obin highlighted that a 12.5kg cylinder connected to a 2.5KVA generator can provide approximately 40-50 hours of electricity, depending on the generator’s load. 

He estimated the cost to be around N60 per hour, allowing for 10 days of usage if running it for five hours daily or four days if running it for 10 hours daily. Comparatively, using gas is significantly cheaper than petrol and does not face the same scarcity issues.

Regarding the installation process, Obin explained that anyone can easily install the carburetor by simply removing the old one and replacing it with the new one, connecting it to the gas cylinder. 

He referred to it as a “plug and play” process. While it can be done without professional assistance, he acknowledged that some individuals may prefer to have it fixed by a generator electrician for added peace of mind

Concluding Thoughts

While the trend of connecting cooking gas to petrol generators highlights the ingenuity of Nigerians in finding affordable energy solutions, it is crucial to prioritize safety and adhere to recommended practices. 

Stakeholders, including government agencies, energy providers, and consumers, should collaborate to address the potential risks associated with this practice. 

A comprehensive approach encompassing safety measures, infrastructure development, environmental considerations, and long-term energy planning is necessary to harness the benefits of gas as a fuel source for generators while mitigating potential risks.

The Nigeria National Petroleum Company (NNPC) Limited has officially adjusted its pump price to N537 per liter in Abuja, while in Lagos State, the retail fuel price is now N488 per liter. It is expected that other fuel marketers will follow suit and adjust their prices accordingly.

This move by the government comes as the NNPC, being the sole supplier of petrol in Nigeria, plays a crucial role in ensuring energy security. The adjustment in fuel prices is evident across various states, with different regions experiencing varying price increases.

For instance, in Abuja and other North-Central States, the price has risen from N189 to N194 to N537 per liter. In Lagos and other South West States, prices have increased from N184 to N189 per liter to between N488 and N500.

In the South East, the price has gone up from N184 to N189 per liter to between N515 and N520, while in the North-West, it has risen from N194 to N540 per liter. In the North-East, prices have increased from N199 to N550 per liter.

The decision to remove the subsidy on PMS was welcomed by the NNPC as it had been shouldering the burden of the subsidy on behalf of the federation.

The subsidy claims had affected the company’s cash flow and sustainability plans, with the federal government unable to refund the subsidy. By removing the subsidy, the NNPC can focus on its commercial operations and deliver dividends to its shareholders.

The NNPC reassured Nigerians that it has sufficient storage and supply of PMS, urging the public not to engage in panic buying.

It is working in collaboration with the Nigeria Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) to develop a framework for implementing the removal of the subsidy.

As the supplier of last resort mandated by the Petroleum Industry Act (PIA), the NNPC will continue to ensure the availability of PMS and other petroleum products.

The removal of fuel subsidies had been anticipated, as the federal government has been taking steps to stop the payment of subsidies.

The 2023 Fiscal Framework and Appropriation Act, as well as the Petroleum Industry Act (PIA), have provisions for the government to exit fuel subsidies by June 2023.

The decision to remove the subsidy reflects the government’s recognition of the unsustainable nature of fuel subsidies. The monthly subsidy burden had reached approximately N400 billion, posing a significant challenge for the state to bear.

This move is likely to have a direct impact on the cost of living for Nigerians, as increased fuel prices can lead to higher transportation costs and inflationary pressures. It may also have implications for various sectors of the economy, including transportation, manufacturing, and agriculture, which rely heavily on affordable fuel prices.

Overall, the removal of the fuel subsidy represents a significant policy shift aimed at addressing the fiscal challenges associated with subsidies.

The government’s focus is now on developing a more sustainable and efficient energy sector that can support economic growth and development in Nigeria

…”Everything in this plant by way of size is the first. It is the largest single-train refinery in the world. There is no single column which can process 650,000 barrels per day anywhere else” – Sanjay Gupta, CEO, Dangote Petroleum Refinery and Petrochemicals.

The commissioning of the Dangote Refinery, the world’s largest single-train refinery, Monday in Lagos marks a significant milestone in the history of Nigeria. 

President Muhammadu Buhari and other dignitaries, both national and international across different sectors of the economy were present to grace the landmark event. 

With the Nigerian government planning to remove the petrol subsidy later this year, the refinery’s inauguration comes with great expectations. 

This article explores key insights into the refinery, its capacity, economic potential, and its impact on Nigeria’s energy security.

1. Capacity and Infrastructure

Situated in Ibeju-Lekki, Lagos, the Dangote Refinery covers an expansive land area of approximately 2,635 hectares, equivalent to seven times the size of Victoria Island. 

It boasts a staggering capacity of 650,000 barrels per day, making it the largest single-train refinery globally. 

The refinery’s pipeline infrastructure, spanning 1,100 kilometers, can handle 3 billion standard cubic feet of gas per day.

2. Compliance with International Standards

The refinery’s design adheres to global standards, including those set by the World Bank, the US Environmental Protection Agency (EPA), European emission norms, and the Department of Petroleum Resources (DPR). 

This ensures environmentally friendly operations and compliance with emission and effluent regulations.

3. Fuel Self-Sufficiency and Export Potential

Dangote Petroleum Refinery is poised to meet 100% of Nigeria’s refined product requirements, including gasoline, diesel, kerosene, and aviation fuel. 

It has a production capacity of 53 million liters per day of gasoline, 34 million liters per day of diesel, 10 million liters per day of kerosene, and 2 million liters per day of aviation fuel. 

Moreover, the refinery is anticipated to have surplus production for export, generating foreign exchange earnings for the country.

4. Economic Implications

The Dangote Refinery’s impact on Nigeria’s economy is profound. Analysts estimate that it will create a market for approximately $1 billion worth of Nigerian crude annually, boosting foreign exchange earnings by $9.9 billion. 

Furthermore, it is expected to save Nigeria up to $10 billion in foreign exchange through reduced fuel imports and generate an additional $10 billion in export revenue.

The refinery’s operation also has the potential to stimulate domestic crude oil production, contributing to increased GDP.

5. Job Creation and Skill Development

The completion of the Dangote Refinery will not only create direct and indirect employment opportunities but also foster skills transfer and technology acquisition.

The training of 900 young engineers, mechanical engineers trained in Italy, and process engineers trained by Honeywell/UOP showcases the commitment to empowerment and skill acquisition.

6. Financial Support and Stakeholders

The construction of the Dangote Refinery was made possible through financial backing from various sources.

Afreximbank played a significant role as the largest financer, while a consortium of local and international banks, led by Standard Chartered Bank, provided a syndicated loan facility of $3.3 billion. 

Additionally, Nigeria’s Federal Executive Council acquired a 20% stake in the project through the Nigerian National Petroleum Corporation (NNPC). That stake is worth $2.76bn.

7. Non-Petroleum Product Output

Apart from petroleum products, the refinery will produce other essential commodities. These include Euro-V quality gasoline, diesel, jet fuel, kerosene, polypropylene, propane, sulfur, and carbon black feed. 

The surplus production of these products creates export opportunities and strengthens Nigeria’s industrial capabilities.

8. Ending Fuel Importation

Projections indicate that Nigeria will significantly reduce and eventually cease importing refined fuel by mid-2023. With the Dangote Refinery’s capacity and the combination of other domestic refineries, the country aims to achieve self-sufficiency in fuel production, ensuring energy security and reducing the burden of import.

We believe these are facts Nigerians should keep in mind regarding the Dangote refinery.