Dangote Refinery Expands Fuel Storage Capacity to 5.3 Billion Litres

Dangote Group President Alhaji Aliko Dangote announced an expansion of the Dangote Refinery’s storage capacity by 600 million litres, bringing the total capacity to 5.3 billion litres. Currently, the refinery holds 4.78 billion litres of refined petroleum products.

Speaking at the Afreximbank Annual Meetings and AfriCaribbean Trade & Investment Forum in Nassau, The Bahamas, Dangote revealed that international oil companies have been reluctant to sell crude oil to his refinery, fearing competition.

Regarding potential reductions in petrol pump prices, which currently hover around N700 per litre, Dangote refrained from making definitive promises. However, he cited the substantial price drop in diesel, from N1,700 to N1,200, after his refinery began production.

“The issue of gasoline is different and is being managed by the government,” he noted. “But with diesel, we saw prices drop significantly when we entered the market, indicating the potential for similar impacts on gasoline.”

Dangote emphasized the strategic importance of the refinery as a national reserve for refined products, highlighting the lack of strategic reserves for petrol in Nigeria. The refinery’s increased capacity will bolster the country’s reserve capabilities.

He also discussed challenges faced from international oil companies, who doubted the viability of the refinery’s 650,000 barrels per day capacity. “The resistance we face is temporary,” Dangote asserted, “but our refinery is essential for Nigeria and sub-Saharan Africa.”

The refinery has been importing crude from the United States, and Dangote criticized the importation of substandard, high-sulfur fuels into Nigeria, linking them to increased cancer rates. He urged the Nigerian government to enforce regulations against such imports.

Despite Nigeria’s substantial crude oil reserves, the country still heavily relies on imported refined fuel. Dangote assured that his refinery will end this dependency once it begins selling Premium Motor Spirit (PMS) within the next few weeks, aiming to also supply cheaper fuel to the Caribbean.

Dangote recounted resistance from both local and international cartels, who he described as “mafia,” attempting to sabotage the $19 billion refinery project. He revealed that some international banks even tried to push the project into default during the COVID-19 pandemic.

Having paid off $2.4 billion of a $5.5 billion loan for the refinery, Dangote highlighted the project’s financial progress despite initial delays due to land issues and sand-filling.

In terms of energy independence, Dangote disclosed that his companies generate 1,500MW of power for self-consumption, minimizing pressure on the national grid.

Operators of modular refineries predict that the pump price of petrol could drop to around N300 per litre upon the Dangote Refinery’s full operation, similar to the diesel price drop.

Although some oil marketers suggest any reduction in petrol prices would be marginal, Dangote remains optimistic about significantly impacting fuel prices in Nigeria and beyond.

Originally, Dangote had planned to release PMS into the market this month but has now scheduled it for July 10 to 15, 2024, due to minor delays.