Nigeria’s Dangote refinery, Africa’s largest, has finally begun delivering petrol, a game changer for the oil-rich country that frequently faces gasoline shortages.
The oft-delayed 650,000-barrel-a-day refinery built by Nigerian billionaire Aliko Dangote began producing diesel and aviation fuel in January, but the OPEC member has had to rely on costly gasoline imports to keep cars running because of a lack of refineries.
On September 3 it finally began to produce petrol and on Sunday some 500 trucks of the state-run Nigerian National Petroleum Corporation arrived at the huge facility to start delivering the fuel on what Finance Minister Wale Edun called a “historic breakthrough day”.
“Today we have taken an important step, a key step toward energy self-sufficiency in Nigeria”, said Edun, who visited the refinery for the occasion.
“We have taken an important step to energy security in Nigeria,” he added.
Nigeria swaps crude worth billions of dollars for petrol that it subsidised for years to maintain low domestic prices.
Fuel imports and subsidies have caused a massive drain on foreign exchange reserves at a time when Nigeria is struggling with dwindling oil revenues and foreign currency shortages.
Dangote Industries Vice President Devakumar Edwin said that the refinery would meet the “entire requirements of the country” with only 44 percent of its production.
As the remaining 56 percent had to be exported, Edwin added that the facility would not only reduce reliance on imports but was also going to ease the drain on Nigeria’s foreign exchange reserves through export revenue.
The refinery, first scheduled to open in 2021, was officially inaugurated by then-president Muhammadu Buhari last year.
Since coming to office in May last year, President Bola Ahmed Tinubu has ended long-standing fuel subsidies and floated the naira currency in economic reforms he says will attract foreign investment and build long-term growth.
But in the short term, fuel prices have doubled, inflation hit a three-decade high of 34 percent in June and the naira has collapsed against the dollar, adding to price pressures on imported goods.
The economic capital Lagos has seen weeks of sporadic long lines outside filling stations due to fuel shortages.
The state-run energy company has raised petrol prices from 568 naira ($0.36) a litre to at least 855 naira on Tuesday. Private operators often have shorter lines because they sell at higher prices.
The energy company said in early September that financial strain had hampered its ability to sustain fuel supplies, even after it declared a record profit last month of 3.3 trillion naira or $2 billion.
The petrol from the refinery is expected to be available at gas stations from October 1.