Dangote refinery is producing more gasoline and diesel than Nigeria currently consumes, aligning with a government plan to introduce a 15% import duty on refined fuels to support local processing and strengthen energy security.
Key Points
In a statement, Dangote Group spokesman Anthony Chiejina said the refinery is “loading 45 million liters of PMS and 25 million liters of diesel daily, which exceeds Nigeria’s demand.” He added that the facility’s output “not only guarantees local supply, but also enhances energy security and reduces dependence on imports.”
The policy backdrop is moving quickly. President Bola Tinubu has approved the “immediate implementation” of a new fuel tax, according to an Oct. 21 letter from his private secretary seen by Bloomberg. While the Federal Inland Revenue Service (FIRS) proposed the levy, it said implementation has not started yet. The stated intent is to protect domestic refiners and reduce reliance on imports.
Dangote refinery output exceeds Nigeria’s fuel demand
The Dangote refinery, which opened in 2024, has rapidly scaled operations to meet and now surpass the country’s consumption needs for key fuels.
Key numbers at a glance:
- Gasoline (PMS): 45 million liters loaded daily
- Diesel: 25 million liters loaded daily
- Nameplate capacity: 650,000 barrels per day
- Additional domestic capacity: NNPC’s four refineries (combined 445,000 bpd) have been idle for decades; other private refineries total about 90,000 bpd
By producing at these volumes, the Dangote refinery is positioned as Nigeria’s primary source for gasoline and diesel. The company says the output ensures steady supply locally and supports broader energy security goals.
“This significant production capacity not only guarantees local supply,” Chiejina said, “but also enhances energy security and reduces dependence on imports.”
Nigeria’s 15% fuel import duty: what’s changing
The proposed 15% import duty on refined fuels is designed to secure local refining economics and curb inflows of imported gasoline and diesel that compete with domestic output.
What’s been communicated so far:
- Policy approval: President Tinubu approved immediate implementation in an Oct. 21 letter, as reported by Bloomberg.
- Policy intent: Protect domestic refiners and stabilize local supply.
- Implementing agency: FIRS proposed the levy and has clarified that implementation has not yet begun.
- Coverage: The duty targets refined products, including gasoline (PMS) and diesel, according to official communications.
Supporters of the measure argue that a clear tariff structure helps local refineries sell into the market with better predictability. Authorities have framed the move as part of a broader strategy to strengthen Nigeria’s energy independence and industrial base.
Capacity, competition and expansion plans
With a nameplate capacity of 650,000 barrels per day, the refinery is Nigeria’s main crude processor and one of the largest in Africa. Its rise comes as the state-owned Nigerian National Petroleum Company Limited (NNPC) continues long-running efforts to rehabilitate four refineries with a combined capacity of 445,000 barrels per day. Despite significant rehabilitation spending over the years, those facilities have not operated for decades.
Other private refineries together add about 90,000 barrels per day in capacity. Against that backdrop, the Dangote facility has become the dominant player in Nigeria’s downstream landscape.
How Dangote refinery plans to scale to 1.4 million bpd
Aliko Dangote, Africa’s richest person and owner of the complex, said this week he plans to raise processing capacity to 1.4 million barrels per day over the next three years. If achieved, the expansion would place the Dangote refinery among the world’s largest single-site refineries by throughput.
A larger footprint could allow the plant to process a wider slate of crude and optimize yields for gasoline and diesel. The company has positioned the expansion as a step toward deeper energy self-sufficiency and potential regional supply.
Government stance and industry reactions
The government’s position has evolved over time. While authorities once accused Dangote of seeking a monopoly, officials have more recently described the plant as “too important to fail,” citing its role in the domestic economy and energy system.
Chiejina defended the import duty proposal in strong terms. “It would be unpatriotic for anyone to criticize the recently-announced tariff,” he said, calling it a measure to protect domestic industries “from unfair competition” and to “safeguard local production.”
Regulators have emphasized that implementation details are still being finalized. The FIRS has been clear that the levy is not yet in force, signaling that timing and specific scope will be communicated ahead of rollout.
Market participants are watching for clarity on:
- When the 15% duty will take effect
- How it will be applied across product categories
- Interaction with existing fees, taxes and distribution margins
What this means for consumers and energy security
Nigeria has historically depended on imported refined fuels even as it produces crude oil. A sustained increase in local refining can reduce exposure to global refining bottlenecks and shipping disruptions, while stabilizing domestic availability.
The Dangote refinery’s current loadings suggest Nigeria can be supplied from local production for gasoline and diesel. That aligns with the government’s objectives to strengthen supply security and reduce dependence on imports.
For the broader region, surplus volumes create an avenue for exports within West Africa, subject to logistics and demand. The company’s scale, along with potential expansion, positions the facility as a key supplier in regional markets, while prioritizing domestic needs.
Distribution, pricing and market dynamics
Refined fuel pricing in Nigeria is shaped by multiple factors, including crude costs, refining economics, taxes, fees and logistics. The new import duty is intended to improve the competitiveness of domestic output relative to imports.
Distribution will remain central to reliability. Stable pipeline operations, trucking capacity and storage management are essential to translating refinery output into consistent supply at depots and retail stations. Coordination among refiners, marketers and regulators will be important as the duty is phased in.
The Dangote refinery’s local production scale also reorients foreign exchange dynamics. Reduced fuel imports typically lessen demand for foreign currency tied to product purchases, which can support macro stability. Authorities have cited stronger domestic refining as part of a wider economic resilience agenda.
Oversight, transparency and competition
Policymakers have acknowledged the need to balance support for local industry with fair competition. Clear rules on quality standards, access to distribution infrastructure and market oversight help avoid distortions while protecting consumers.
For the Dangote refinery, transparency around volumes, product specifications and delivery timelines will remain in focus. Regulators are expected to monitor the duty’s impact and adjust frameworks as needed to maintain a competitive and reliable market.
What to watch next
Several milestones will shape the next phase:
- Formal start date: The FIRS is expected to announce when the 15% import duty becomes effective.
- Scope and guidance: Authorities may detail coverage across gasoline, diesel and other refined products, along with compliance procedures.
- Supply cadence: Consistent daily loadings from the Dangote refinery and delivery to regional depots will be key indicators of market stability.
- Expansion roadmap: Updates on the plant’s progress toward 1.4 million barrels per day, including timelines and technical milestones.
- NNPC rehabilitation: Any material restart plans at state-owned refineries and how that interacts with private supply.
Conclusion
Nigeria is entering a new phase in its fuel market. With output that now exceeds local gasoline and diesel demand, the Dangote refinery has become the anchor of domestic supply. The government’s planned 15% import duty is intended to reinforce that shift by supporting local refining and bolstering energy security.
Implementation details will matter. Clear timelines, transparent rules and steady distribution will shape how the policy plays out on the ground. As the Dangote refinery pursues its expansion plans, Nigeria’s downstream sector is poised for structural change—with domestic production taking a larger role in powering the economy.
FAQ’s
What is the Dangote refinery’s current output?
The company says it is loading 45 million liters of gasoline and 25 million liters of diesel daily, exceeding Nigeria’s current demand.
What is the 15% fuel import duty and is it in effect?
President Bola Tinubu approved immediate implementation, but the FIRS says rollout has not started yet. An official start date is pending.
Will the 15% import duty raise or lower pump prices?
The impact is uncertain and depends on crude prices, exchange rates, taxes and distribution costs. The policy aims to support local refining.
Is the Dangote refinery planning to expand capacity?
Yes. Aliko Dangote said the refinery plans to increase capacity to about 1.4 million barrels per day over the next three years.
Article Source: Bloomberg
