At a recent Afreximbank Annual Meeting and AfriCaribbean Trade & Investment Forum in Nassau, the Chairman of the Dangote Group, Aliko Dangote, provided insights into how the production process at his Lagos-based refinery might lead to a reduction in petrol prices.
Dangote, who operates a $20 billion refinery with a capacity of 650,000 barrels per day, explained that the price of petrol could decrease similarly to how the price of diesel dropped when his refinery’s diesel entered the Nigerian market.
Currently, his refinery has a storage capacity of 4.78 billion liters for refined petroleum products.
“When we first started producing diesel, the price was N1,700, and the dollar conversion was about N1,200. Within two weeks of our production, we reduced the price to N1,000. We took it from N1,700 to N1,200, resulting in more than a 60 percent drop in price. Even with the currency now at about N1,500 per dollar, the price remains below N1,200,” Dangote explained.
When questioned about the possibility of reducing the pump price of petrol, which currently averages N700 per liter, Dangote acknowledged that the issue is being managed by the government.
He also highlighted the lack of strategic reserves for petrol in Nigeria, which his refinery aims to address by adding another 600 million liters to its existing storage capacity.
Dangote further mentioned that international oil companies have been reluctant to sell crude oil to his refinery, a challenge he attributes to their unwillingness to see his venture succeed. Despite this, he remains optimistic about overcoming these hurdles.
To address crude supply issues, the Dangote Refinery has turned to the US for a monthly supply of 24 million barrels.
This has resulted in the refinery postponing the commencement of fuel supply to July 10–15, 2024, from the initially planned date in June.
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