In 2024, Nigeria's petrol import expenditure surged to a record N15.42 trillion, marking a 105.3% increase from the previous year's N7.51 trillion. This sharp rise underscores the nation's persistent reliance on imported fuel, despite significant investments in domestic refining capacity.
Escalating Import Costs
Over the past five years, Nigeria's petrol import costs have escalated dramatically:
2020: N2.01 trillion
2021: N4.56 trillion (a 126.9% increase)
2022: N7.71 trillion (a 69.1% increase)
2023: N7.51 trillion (a slight 2.6% decrease)
2024: N15.42 trillion (a 105.3% increase)
The 2024 surge is largely attributed to the 40.9% depreciation of the naira, which significantly inflated import costs in local currency terms.
Dangote Refinery's Operational Hurdles
The Dangote Petroleum Refinery, with a capacity of 650,000 barrels per day (bpd), was anticipated to reduce Nigeria's dependence on imported fuel. However, the refinery has faced several challenges:
Delayed Full Operations: As of February 2025, the refinery was operating at 85% capacity, with expectations to reach full capacity within 30 days.
Crude Supply Issues: Despite an agreement with the Nigerian government to purchase crude in naira, the refinery struggled to secure adequate local crude supplies, leading to the importation of crude in 2024.
Financial Challenges: The refinery's construction costs escalated to $20 billion, more than double the initial estimates, raising concerns about its profitability, especially with the devaluation of the naira.
Continued Dependence on Imports
Despite the refinery's partial operations, Nigeria's domestic refining remains insufficient to meet national demand, necessitating continued large-scale imports. This ongoing reliance on imported fuel exposes the country to foreign exchange fluctuations and strains government finances and consumer purchasing power.
Future Outlook
The Dangote Refinery's anticipated move to full operational capacity could potentially reduce Nigeria's fuel import dependency. However, addressing challenges such as securing consistent local crude supplies and ensuring financial viability remains crucial for achieving energy self-sufficiency.
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