Nigeria’s long standing dependence on imported petrol is rapidly fading as the 650,000 barrels per day Dangote Petroleum Refinery & Petrochemicals transforms the country’s downstream oil sector, according to the Economist Intelligence Unit (EIU).
In its latest assessment of Nigeria’s energy market and regulatory environment, the London based research and analysis arm of The Economist Group said the operational ramp up of the refinery is reshaping fuel supply dynamics, improving domestic availability of petroleum products, and strengthening Nigeria’s external financial position.
The EIU disclosed that the refinery met nearly 80 per cent of Nigeria’s domestic petrol demand in April, adding that production levels are now approaching volumes capable of fully satisfying local consumption requirements.
Describing Nigeria’s downstream sector before the emergence of the refinery as “long dysfunctional,” the report noted that Africa’s largest crude oil producer had remained heavily dependent on costly imported refined products despite 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.”
According to the EIU, the refinery’s growing output is already reducing pressure on foreign exchange demand by cutting fuel import volumes while simultaneously boosting export earnings through refined petroleum exports.
The report projected that the attainment of full operational capacity and the planned expansion of the refinery would further support Nigeria’s economic growth trajectory and strengthen foreign exchange earnings over the medium to long 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,” the EIU added.
Analysts said the refinery is increasingly positioning Nigeria as a major refining and export hub for Africa, altering regional energy trade flows and reducing vulnerabilities associated with fuel import dependence.
The report also linked the refinery’s rise with major reforms in Nigeria’s downstream petroleum sector, including the removal of fuel subsidies and the transition toward market driven pricing mechanisms.
However, the EIU noted that the transition away from a state dominated fuel import regime has generated pushback from entrenched interests tied to fuel importation.
The latest dispute followed the decision by the Nigerian Midstream and Downstream Petroleum Regulatory Authority to ease restrictions on petrol imports despite the refinery’s increasing capacity to meet local 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, which seeks to prioritise local refining capacity.
Economic analysts said the refinery’s scale has significantly improved Nigeria’s energy security by reducing exposure to external supply shocks, freight disruptions, and exchange rate volatility.
The Centre for the Promotion of Private Enterprise also warned against unrestricted fuel imports, stressing that excessive import dependence historically weakened industrialisation efforts and intensified pressure on Nigeria’s foreign reserves.
Chief Executive Officer of CPPE, Muda Yusuf, said large scale local refining capacity would help stabilise the economy, support manufacturing, conserve foreign exchange, and reduce fiscal leakages associated with fuel imports.
The refinery’s growing influence is also beginning to reflect in Nigeria’s broader macroeconomic outlook.
Earlier this month, S&P Global Ratings cited rising domestic refining capacity and increased hydrocarbon exports among the factors supporting Nigeria’s sovereign credit rating upgrade — the country’s first in 14 years.
Beyond Nigeria, energy experts said the refinery is increasingly being viewed as a strategic industrial asset for Africa, where many countries still rely heavily on imported refined petroleum products despite rising energy demand across transportation, manufacturing, and power generation sectors.
