Technical, political challenges thwarting African refining: Dangote

Nigeria's giant new Dangote refinery has transformed West African fuel supply dynamics, but technical and political barriers still threaten broader downstream oil development across the continent, Africa's richest man Aliko Dangote said July 22.

Speaking at a downstream conference in Abuja, Dangote said Africa's continued reliance on 120 million tons of annual product imports - representing a $90 billion market - reflects systemic challenges that extend far beyond his Nigerian project.

The businessman said that while Africa produces 7 million b/d of crude, just 40% of the 4.3 million b/d of the refined products the continent consumes are refined locally, mostly in Algeria, Egypt and now Nigeria.

"In sub-Saharan Africa we don't have more than three good, working refineries. Compare Europe and Asia where they refine about 95% of their consumption," Dangote told the conference, which was organized by S&P Global Energy and Nigeria's downstream petroleum regulator. "We still import about 120 million tons of products each year. We are importing poverty," he said.

The 650,000 b/d Dangote refinery was billed as a ticket to fuel self-sufficiency for Nigeria and came online in early 2024, after years of delays and cost overruns. Despite issues with crude supply and fuel spec harmonization, the project today produces some 550,000 b/d of refined products.

In his speech, Dangote raised a string of major challenges, from "rent seeking," the dumping of cheap foreign fuel, shipping costs and trading-related price dynamics, that are still holding back large-scale downstream development on the continent, where governments have long seen foreign exchange eroded by fuel imports.

Nigeria imported 500,000 b/d of refined products in the first quarter of 2023, mostly European gasoline, but that fell to 88,000 b/d in Q1 2025 thanks to the Dangote refinery, according to shipping data from S&P Global Commodities at Sea.

As a result, Dangote -- who made his name in the cement business and now heads a sprawling business empire -- said African countries were "more capable than ever" of refining their own petroleum products. But not before major challenges are resolved.

The first is technical, with the Dangote refinery depending on imported equipment, 65 million cubic meters of dredged sand, a new port and millions of meters of piping, cabling and wiring to get off the ground. He said construction efforts were set back by two years because of faulty equipment.

It also faced issues with crude feedstock sourcing. "It was reasonable to assume that in a country producing over 2 million b/d, securing crude would be the least of our worries, but we were wrong," Dangote said. "We found ourselves having to negotiate with international trading companies who were buying Nigerian crude and selling it back to us."

He said that IOCs had been "the most difficult in our journey", and that he had encountered skyrocketing port charges, some of which were charged twice, making Nigeria's light sweet grades affordable for Indian refiners than Nigerian ones, he said.

A plan to force operators to supply some crude locally, announced by Nigeria's oil sector regulators, has yet to get up and running, with no agreement yet on quantities and what currency to use.

Fuel spec harmonization

Dangote also took aim at the failure to harmonize fuel specifications across Africa. Unlike in Europe, gasoline produced in Nigeria cannot be sold in some neighboring countries, which "benefits no one except the international fuel traders who thrive on arbitrage," Dangote said.

The refinery has also had to endure competition from far cheaper foreign petroleum products, including those derived from Russian crude, he said. "We are now facing increasing dumping of cheap, often toxic, petroleum products which would never be allowed in Europe or America," Dangote said, adding that fuel could be purchased for as little as 60 cents/liter in Nigeria, even cheaper than in Saudi Arabia.

Finally, the refinery faced "contextual challenges," Dangote said, including "entrenched rent seeking" that put him at odds with powerful individuals profiting from Nigeria's thirst for imported fuel.

"When you build a refinery and disrupt that system you are threatening powerful interests that will fight back," he said.

Despite the challenges, the refinery exported 1 million tons of gasoline in the past 50 days, Dangote said, while it is also producing 3 million tons of urea per year.

"Nigeria is actually catching up, it is going to beat Egypt in the next 16 months and will be the biggest producer of urea in Africa," he said.

Following previously proposed plans for an IPO -- and amid concerns about monopoly power -- Dangote said his giant plant "will be listed to give all Nigerians the opportunity to become shareholders."