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The Dangote Refinery, a $20 billion project led by billionaire Aliko Dangote, has officially commenced production of Premium Motor Spirit (PMS), commonly known as petrol. This marks a significant step forward in Nigeria’s energy sector, providing a potential solution to the country’s ongoing fuel scarcity.
Located in Lagos, the refinery, which has a capacity of 650,000 barrels per day, began production on Tuesday, September 3, 2024, more than a year after its launch in May 2023. This development is expected to bring relief to millions of Nigerians facing fuel shortages.
Speaking during a press briefing, Dangote praised the current administration for creating a conducive environment for the project’s success, stating, “This refinery will fuel growth, development, and prosperity by supplying energy to our people.” He also acknowledged President Bola Tinubu’s “Naira for crude, Naira for product” initiative, which he believes will reduce the demand for dollars by 40%, thereby stabilizing the Naira.
The refinery is expected to reach its full capacity by the end of the year, providing diesel, aviation fuel, and petrol to the local market. This comes as the Nigerian National Petroleum Company Limited (NNPCL) grapples with a $6 billion debt to petrol suppliers, which has exacerbated the country’s fuel shortages.
Fuel Scarcity and Economic Impact
Nigeria, the most populous nation in Africa, has faced fuel scarcity and rising costs since the removal of fuel subsidies in May 2023. The prices of petrol have tripled, from around ₦200 per litre to about ₦800 per litre, placing further strain on citizens who rely heavily on petrol-powered vehicles and generators due to inconsistent electricity supply.
The ongoing fuel crisis has been worsened by the depreciation of the Naira, which fell from $1/₦700 to over $1/₦1600 at the parallel market following the unification of forex windows. This has led to soaring prices for food and basic commodities, compounding inflation in the country.
