Despite efforts to boost local refining, Nigeria continues to spend heavily on petrol imports. In 2024, the country’s petrol import bill soared to ₦15.42 trillion, more than double the ₦7.51 trillion spent in 2023. This raises concerns about the effectiveness of the country’s energy policies and economic priorities.
Impact of Petrol Imports on the Economy
Relying on imported petrol drains foreign exchange reserves weakens the Naira and fuels inflation. In theory, expanding local refining capacity should reduce this dependence and stabilize fuel prices, yet the numbers tell a different story. Between October 2024 and January 2025, oil marketers imported petrol worth ₦5.5 trillion, with an additional ₦930 billion spent in February.
This trend contradicts the government’s economic reform plans and violates key provisions of the Petroleum Industry Act (PIA), which was designed to promote local refining.
Discrepancies in Refinery Production Data
The PIA states that petrol imports should only occur if local refineries cannot meet demand. The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) claims that daily petrol consumption stands at 50 million litres, while local production meets less than half of this demand.
However, available data suggests otherwise. The Dangote Refinery processes 500,000 barrels of crude daily, while the Warri and Port Harcourt refineries, operating at 60% and 70% capacity, contribute an additional 117,000 barrels daily. This amounts to approximately 617,000 barrels per day, translating to over 46 million litres of petrol based on global conversion standards.
The Nigerian National Petroleum Company Limited (NNPCL) reports that local production is under 25 million litres daily, raising questions about the actual output of the Warri and Port Harcourt refineries or potential flaws in NMDPRA’s data.
The Argument Against a Dangote Monopoly
Some government agencies, including the NNPCL and the Federal Competition and Consumer Protection Commission (FCCPC), argue that allowing unrestricted petrol imports prevents Dangote Refinery from having a monopoly.
However, real competition would come from supporting other local refineries rather than encouraging importation. In other countries like France and the U.S., regulators ensure fair pricing without undercutting domestic producers. Nigeria has successfully implemented this approach in the telecommunications sector, using price caps to maintain competition.
If Dangote Refinery were inflating prices, the NMDPRA has the authority to intervene. The argument that a monopoly exists does not hold up, as there are no signs of price manipulation by the refinery.
Crude Supply Challenges
Although refining capacity has increased, crude supply to local refineries has declined. The NNPCL recently suspended its Naira-for-crude deal with Dangote and other refineries, stating that most of its crude has already been committed to foreign buyers.
This contradicts the PIA, which mandates that local refineries should receive a statutory crude allocation before exports. Despite an increase in Nigeria’s crude production, petrol imports continue to rise, pointing to either mismanagement or deliberate neglect at a time when many nations are prioritising local manufacturing.
The Way Forward
Nigeria has a chance to achieve energy independence, but persistent petrol imports threaten this goal. A 650,000-barrel-per-day refinery like Dangote’s provides jobs, saves foreign exchange, and strengthens the economy benefits that petrol importation cannot offer.
To move forward, policymakers must prioritize local refining, enforce the PIA, and address discrepancies in crude supply and production data. Without these steps, Nigeria risks missing a crucial opportunity to become self-sufficient in fuel production.
