Nigeria’s Dangote Oil Refinery has begun processing gasoline after delays caused by recent crude shortages, an executive of the company has said.
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But the world’s single largest oil refinery will not be selling to just anyone who wishes to do business with the company: it will sell only to Nigeria’s national oil company, the Nigerian National Petroleum Corporation (NNPC).Â
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The $20 billion refinery on the outskirts of Lagos began operations in January with production of products including naphtha and jet fuel.
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With a capacity of 650,000 barrels per day, Africa’s largest refinery promises to ease oil producer Nigeria’s costly reliance on imported oil products.
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“We are testing the product (gasoline) and subsequently it will start flowing into the product tanks,” said Devakumar Edwin, a vice president at Dangote Industries Limited, who would, however, Â
not say exactly when the gasoline would hit the local market.
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But he disclosed that the state-oil firm NNPC Ltd, Nigeria’s sole importer of gasoline, would buy its gasoline exclusively.
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“If no one is buying it, we will export it as we have been exporting our aviation jet fuel and diesel,” Edwin said.
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The delivery of gasoline into the Nigerian market will ease NNPC’s struggle to supply the local market. The company is reeling with debts of $6 billion to oil traders for supply since January.
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This has affected its ability to supply the local market where fuel queues have persisted since July.
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Prices have jumped by 45% from the official price of 617 naira ($0.3942) announced after subsidies were removed last year and are inching towards N1000 per litre in some parts of the country.
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“The news that Dangote is processing gasoline couldn’t come at a more crucial time given NNPC’s statement about its difficulties securing imported supply due to financial strain,” said Clementine Wallop, director, sub-Saharan Africa at political risk consultancy Horizon Engage.
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She said this “prompts the question of how NNPC will manage purchasing from Dangote, and impresses the need for greater transparency in its financial transactions.
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Though the country is Africa’s top oil producer, it imports almost all its fuel due to years of neglect of its national refineries.Â
