Africa’s richest man Aliko Dangote’s mega refinery pushes back petrol supply date

Timilehin Adejumobi -

Key Points

  • Dangote Industries delays petrol production due to ongoing crude oil supply issues, impacting the refinery’s start date.
  • The refinery’s production, set to ease Nigeria’s fuel shortages, faces setbacks from crude oil delays and liquidity problems.
  • Fitch Ratings suggests Dangote might sell a 12.5% stake in the refinery to address financial strain and operational challenges.

Dangote Industries Limited, the diversified manufacturing conglomerate led by Africa’s richest man Aliko Dangote, has delayed its petrol supply date due to crude oil supply issues. The refinery, initially set to start producing Premium Motor Spirit (PMS) in early August, is facing major operational challenges.

Dangote’s $20 billion refinery faces setbacks amid crude oil supply issues

The 650,000-barrel-per-day refinery was expected to ease Nigeria’s fuel shortages. However, delays in securing crude oil have emerged as a critical bottleneck. Dangote, who had hoped the refinery would start producing petrol this month, is currently grappling with liquidity issues.

Fitch Ratings reports that Dangote might sell a 12.5% stake in the $20 billion refinery to a state-owned energy firm. This potential sale underscores the financial strain on the project. 

Despite these obstacles, sources say petrol production should begin by the end of August, though crude oil supply remains a major concern. “All is set for the refinery to roll out petrol this month, but the constant supply of crude oil is essential to keep operations running smoothly,” a top official, speaking on the condition of anonymity, revealed.

Uncertainty hangs over fuel sales

Located near Lagos, the Dangote Petrochemical Complex is a major milestone in Nigerian industrial development, featuring a one-million-metric-tonne-per-year polypropylene plant and two large fertilizer trains with a combined annual capacity of three million tonnes of urea. 

Last week, the refinery recently faced scrutiny for producing diesel with high sulphur content, raising environmental concerns and attracting criticism from industry stakeholders.

Marketers and stakeholders in Nigeria’s oil industry are eagerly awaiting the refinery’s first petrol sale, which many hoped would alleviate the country’s fuel supply challenges. Yet, with 29 million barrels of crude oil still awaited from the Nigerian Upstream Petroleum Regulatory Commission, uncertainty looms large over the refinery’s operational timeline. 

As the Dangote Refinery navigates these challenges, the industry watches closely, aware that the successful launch of this facility could mark a transformative moment for Nigeria’s energy sector. “We are 100 percent ready for the supply of PMS this month,” another source confirmed, “but the low supply of crude oil continues to be a significant hurdle.”