The Dangote Petroleum Refinery has indicated that it may continue increasing petrol exports if imported fuel keeps entering Nigeria in large volumes, saying the situation is making it difficult to plan production and manage its inventory.
The refinery disclosed that imported Premium Motor Spirit, commonly known as petrol, accounted for about 43 percent of total petrol supplied to the Nigerian market in July.
According to the company, the development is creating uncertainty over domestic demand despite the refinery’s ability to produce enough petrol to meet, and potentially exceed, Nigeria’s requirements.
The refinery said it had maintained substantial petrol reserves since beginning operations to ensure that consumers across the country had reliable access to fuel. Maintaining those reserves, it noted, requires considerable spending on storage, logistics and working capital.
However, the continued issuance of licences for petrol imports has made it difficult for the refinery to determine how much imported fuel will enter the market and, consequently, how much product it should keep in storage.
The company said holding large quantities of petrol without clear information about future imports was becoming commercially unsustainable because of the additional storage and financing costs involved.
As a result, the refinery said it had increasingly turned to exports to move surplus petrol that could not be immediately absorbed by the domestic market.
It stressed that the rise in exports should not be interpreted as a decision to abandon the Nigerian market or an indication that it is unable to meet local demand.
Rather, the refinery explained that exports were being used to clear excess stocks generated by uncertainty surrounding imported fuel volumes.
The company maintained that it remains capable of supplying the country’s petroleum needs and is committed to ensuring a dependable supply of products to the domestic market.
It also warned that any future fuel shortages arising from excessive imports or distortions in the market should not be attributed to the Dangote refinery, particularly where local refiners are unable to accurately forecast demand because of unpredictable import volumes.
The refinery called for greater transparency in the petroleum market, improved coordination among industry stakeholders and policies that would encourage domestic refining.
It argued that such measures would strengthen Nigeria’s energy security, reduce pressure on foreign exchange and ensure that the country derives greater economic benefits from investments in local refining capacity.
