Dangote warns: 43% petrol imports threaten local refining, forc...

The Dangote Petroleum Refinery has raised fresh concerns over the continued influx of imported petrol, warning that imported Premium Motor Spirit (PMS) accounted for about 43 per cent of petrol supplied to Nigeria in July, forcing the refinery to increase exports of excess products despite having the capacity to meet and exceed domestic demand.

The refinery said the scale of petrol imports was distorting demand signals and making it difficult for local refiners to accurately plan production, manage inventories and deploy working capital efficiently.

According to the company, it has consistently maintained sufficient inventories and reserved product volumes since commencing operations to ensure uninterrupted supply to the Nigerian market.

That strategy, however, requires substantial spending on storage, logistics and working capital.

Dangote Refinery said uncertainty over how much imported petrol would enter the country makes it difficult to determine how much product should be produced and stored for the domestic market.

Maintaining large inventories for an uncertain market, it said, comes with significant carrying and financing costs, particularly when imported PMS is competing directly with locally refined products.

“As a responsible energy provider, we have always endeavoured to keep adequate reserves to satisfy local demand at all times,” the refinery said.

But the company warned that continuing to hold excess stocks indefinitely was becoming commercially unsustainable.

As a result, products that are not immediately absorbed by the Nigerian market are increasingly being exported to regional and international destinations.

The refinery stressed that the rise in exports does not reflect an inability to supply the Nigerian market.

Rather, it said exports have become an operational response to surplus inventory created by uncertainty over domestic demand amid continuing petrol imports.

Dangote Refinery said the development should therefore not be interpreted as a reduction in its commitment to Nigeria, noting that it remains capable of meeting and exceeding the country’s petroleum-product requirements.

The refinery also cautioned against attributing any future domestic supply shortages caused by import-related market distortions to local refiners.

It argued that inaccurate visibility over import volumes could affect production and inventory decisions regardless of the capacity and willingness of domestic refiners to supply the market.

The company called for greater transparency and coordination in Nigeria’s downstream petroleum market, particularly around the management of fuel imports and domestic production.

It said policies should encourage local refining, strengthen energy security, conserve foreign exchange and maximise the economic benefits of investments in domestic refining infrastructure.

The issue is economically significant because Nigeria has invested heavily in expanding domestic refining capacity as part of efforts to reduce its longstanding dependence on imported petroleum products.

With the Dangote refinery positioned as a major pillar of that strategy, continued inflows of imported petrol could create a mismatch between the country’s refining capacity and actual domestic market absorption.

For local refiners, the concern is not simply competition but the uncertainty created when imported volumes are difficult to forecast.

For consumers and the wider economy, the outcome will depend on whether stronger domestic refining eventually translates into more stable supply, lower logistics costs, reduced foreign exchange demand and more competitive petrol prices.

The 43 per cent import share therefore raises a larger policy question for Nigeria: whether the country’s emerging refining capacity will be allowed to operate at scale or continue competing with imported products in a market where local producers say demand signals remain distorted.