Nigeria’s diesel market is facing growing uncertainty, with reports that Dangote Refinery, one of the country’s main diesel suppliers, is struggling to keep up with demand. The refinery has been a stabilising force for diesel (also known as automotive gas oil, or AGO) prices, but now, due to limited crude supply and financial hurdles, it is falling short. With demand for diesel remaining high, this shortage could mean steep price increases and supply issues for Nigerians in the coming weeks.
Dangote’s Role in Nigeria’s Diesel Market: Dangote Refinery entered Nigeria’s diesel market with the ability to impact both prices and availability. When it began selling diesel, the price was about N1,500 per litre. Over time, Dangote reduced the price to around N1,200, encouraging competitors to keep their prices in check and providing diesel at more affordable rates across the country.
This price stability was a relief to businesses, transport operators, and consumers. But now, Dangote Refinery is facing a challenge, it doesn’t have enough crude oil to keep producing diesel at the same rate. Industry sources report that Dangote is urgently seeking a loan to fund the purchase of crude, which would allow it to continue supplying diesel at reasonable rates. If the refinery cannot secure this funding soon, the current shortage may get worse, driving diesel prices up across the board.
Supply is Tight and Demand is Rising: Dangote’s supply issues come at a time when diesel demand remains high. With other suppliers unable to fill the gap, diesel buyers are already experiencing limited access, with some finding it difficult to get fuel at Dangote’s depots or from other sources. According to reports, the refinery is currently able to produce only about 40% of what it usually supplies, which isn’t enough to meet the country’s needs.
If this shortage continues and imports are restricted, the gap between supply and demand will widen, making diesel harder to find and potentially more expensive. This could have a ripple effect on multiple sectors, especially those that rely on diesel for daily operations.
Impact on Nigerian Buyers and Possible Price Increases: The shortage is hitting Nigerian diesel buyers hard, from local businesses to truck drivers, who all rely on affordable fuel to stay profitable. Previously, Dangote’s lower prices kept costs down for consumers, but now buyers are noticing that the price difference between Dangote’s diesel and other suppliers’ diesel is narrowing. Some buyers are even reporting long wait times or limited quantities at Dangote’s depots, signs that the shortage is beginning to affect the average consumer.
If Dangote does not secure the necessary funding to import more crude, or if other importers are blocked from bringing in diesel, Nigeria’s diesel supply could tighten even further. As one of the primary suppliers, Dangote holds significant influence over the market and as Mr Dangote is vigorusly pushing for the total ban of petroleum importation. Without competition or additional supply options, prices may rise, with few alternatives for consumers.
What’s Next: Can Nigeria’s Diesel Market Stabilise? The situation at Dangote Refinery highlights the country’s reliance on a few large players for its diesel supply. With one of these main suppliers struggling, it exposes the risks of limited supply options. In the coming weeks, securing financing and ensuring crude availability will be critical for Dangote if the refinery is to meet demand and prevent further price hikes.
Industry experts suggest that adding transparency and competition in the diesel market could help avoid similar crises in the future. Allowing more importers to bring diesel into the country, or enabling additional suppliers to step in, could help stabilise supply and reduce pressure on individual companies to keep prices low.
For now, the outlook for Nigeria’s diesel market remains uncertain. As Dangote works to address its crude supply issues and seeks financial backing, consumers and businesses are left in a challenging position, with the potential for rising diesel costs on the horizon. If the refinery can secure the needed resources, it may help ease the current shortage. However, the situation highlights the need for a more balanced and competitive diesel supply market in Nigeria to ensure stable prices and availability for everyone.
