The management of Dangote Petroleum Refinery and Petrochemicals (DPRP) has warned that continued issuance of petrol import licences could compel the refinery to increase its focus on exports, as imported Premium Motor Spirit (PMS) continues to take a significant share of the Nigerian market.
The refinery said the situation is creating uncertainty around domestic demand, making it increasingly difficult to plan production and determine the level of inventory required to maintain reliable petrol supplies across the country.
According to market data available to the refinery, imported PMS accounted for approximately 43 per cent of petrol supplied into Nigeria in July, despite the availability of substantial domestic refining capacity.
Dangote Refinery said it has consistently maintained adequate petrol inventories and reserved volumes for the Nigerian market since commencing operations. It noted that doing so requires significant investment in storage, logistics and working capital to ensure supply continuity.
However, the refinery said the lack of clear visibility over the volume of imported petrol expected into the country is making inventory management increasingly difficult.
“As a responsible energy provider, we have always endeavoured to keep adequate reserves to satisfy local demand at all times. However, in an environment where significant volumes of imported PMS continue to enter the market through licences issued by the regulator, and where there is limited visibility on future import volumes, it becomes commercially unsustainable to continue holding excess inventory indefinitely,” the refinery said.
DPRP explained that where locally refined petrol is not immediately absorbed by the domestic market, the surplus has to be moved into regional and international markets to avoid prolonged storage and financing costs. It said this was responsible for the increase in its recent export volumes.
The refinery stressed that higher exports should not be interpreted as a reduction in its commitment to Nigeria. Rather, it said exports provide an operational outlet for surplus products when domestic demand is affected by the continued arrival of imported PMS.
Dangote Refinery maintained that it remains capable of meeting and exceeding Nigeria’s petroleum product requirements and is prepared to sustain domestic supply. It, however, said market participants require greater visibility on import volumes to enable efficient production and inventory planning.
The refinery further argued that any supply disruption resulting from market distortions, excessive imports or poor demand visibility should not automatically be attributed to local refiners, particularly where adequate domestic production capacity exists.
Dangote Petroleum Refinery and Petrochemicals therefore called for greater transparency in the issuance of petrol import licences, improved coordination across the downstream petroleum market and policies that encourage domestic refining, strengthen energy security, conserve foreign exchange and maximise the economic benefits of Nigeria’s growing refining capacity.